Ushering in of Green Bond

Going green is not a moral decision, but an Economic reality’.

Green Panthers have got some palpable business ideas which are not just in the black but also cost-effective beating the polluted proceeds. Be a partner in these green profits. The following explains how?

A bond is a debt instrument with which an entity raises money from investors. The bond issuer gets capital while the investors receive fixed income in the form of interest. When the bond matures, the money is repaid. A green bond is very similar. These bonds are created to encourage sustainability and the development of ‘green’ projects, which typically include those undertaking related to renewable energy, emission reductions and so on. There is no standard definition of green bonds as of now.

Green bonds have been issued in the past by the Obama Administration , World Bank, BlackRock Group, PIMCO, Morgan Stanley etc globally. In India too, companies like Yes Bank, EXIM bank etc have issued green bonds. Green bonds provide better financing o the companies as they generally carry less Rate of Interest along with negligible debt repayment default risk. Globally the market of green bonds have gone up by about 30 times in the past 2 years i.e from 1 billion $ to 30 billion $ from 2012 to 2014. Similarly the first ever Green bond offering in India by EXIM Bank in March was oversubscribed by 3.2 times.

The only risk associated with the issue of green bonds in India is the tenor and credit rating. The green bonds in India carry a tenor of 10 years whereas globally it is minimum 13 years for the same. Also Indian investors generally invest in Bonds by issuer not having credit rating less than AAA which discourages the Green Bond market in India.

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