The maiden issuance of sovereign green bonds (SGrBs) by the government on Wednesday received good response, with the five-year paper and the 10-year paper getting subscriptions of about three times and five times, respectively, the notified amount.
The five year SGrB received 96 bids aggregating ₹13,525 crore against the notified amount of ₹4,000 crore. The RBI, which is the debt manager to the government, accepted 32 competitive bids aggregating ₹3,993.124 crore and two non-competitive bids aggregating ₹₹6.876 crore. The cut-off yield for this paper was 7.10 per cent.
The 10-year SGrB received 170 bids aggregating ₹19,367 crore against the notified amount of ₹4,000 crore. The RBI accepted 57 competitive bids aggregating ₹3,948.646 crore and four non-competitive bids aggregating ₹51.354 crore. The cut-off yield for this paper was 7.29 per cent.
Ajay Manglunia, MD & Head, Investment Grade Group, JM Financial, said: “The maiden auction of SGrBs went well, garnering good investor interest. The pricing was also good — yield was about 5-6 basis points lower than the corresponding maturity Government Security.
“Looking at the initial demand, the upcoming union budget may propose higher resource raising (about ₹40,000-50,000 crore against ₹16,000 crore in FY23) via the SGrBs route.”
RK Gurumurthy, Head-Treasury, Dhanlaxmi Bank, observed that the pricing (cutoff) and demand suggests there will be tremendous appetite for similar issuances. The cutoff yield came fairly lower than corresponding vanilla G-Sec on-the-run.
“Maybe, in the next fiscal, we can see a sizeable jump in issue size of SGrBs,” he said.