India's sovereign green bonds demonstrated robust investor appetite with 4 basis points greenium on Friday's issuance, according to reports from The Economic Times. The government sold ₹50 billion ($524 million) worth of 30-year sovereign green bonds at this premium, leading to an average premium of 4 basis points in the fiscal half-year. This represents the highest greenium since such sales began in the second half of fiscal 2023, indicating sustained investor confidence in environmentally sustainable financing.
Insurance companies are emerging as key drivers of green bond demand in India, as reported by The Economic Times. Insurers require these bonds for optimal asset allocation and regulatory advantages, creating sustained demand that supports the establishment of substantial greenium. Market participants believe the existing demand-supply dynamics have resulted in green bonds trading richer than comparable conventional government securities, with insurers managing growing corpus and finding insufficient substitutes.
India now has ₹877 billion ($9.2 billion) worth of sovereign green bonds outstanding, including the latest issuance, according to The Economic Times. 30-year maturity notes have emerged as the most issued category, crossing the ₹500 billion mark. This concentration in longer-term bonds has helped establish consistent issuance patterns over the past three fiscal years, adequately matching current investor demand.
Market participants anticipate increased green bond supply in the second half of FY27, as reported by The Economic Times. Sachin Bajaj, chief investment officer at Axis Max Life Insurance, believes the market is well positioned to absorb higher supply, particularly if issuance is concentrated in longer-term bonds. Rahul Bhuskute, CIO at Bharti AXA Life Insurance, noted that long green bond issuance has remained consistent over the past three fiscal years, with demand continuing to be supported by insurers' asset-liability management requirements.
