Context:
Recently, Sovereign Green Bonds (SGrBs) are seeing limited investor interest due to lower yields.
Green Bonds:
- Fixed-income financial instruments which are used to fund projects that have positive environmental and or climate benefits.
- Funds raised by green bonds are used only to support initiatives which are beneficial for environment, e.g., green construction, renewable energy etc.
Sovereign Green Bonds (SGrB):
- When these bonds carry guarantees related to the repayment of principal and payment of interest by the sovereign or the government, they are called SGrB.
- Selection and evaluation of projects – Green Finance Working Committee (GFWC) with Ministry of Finance
- Deposition of Proceeds with – Consolidated Fund of India
- Track record – Public Debt Management Cell
- Eligible projects will use the raised proceeds from sovereign green bonds for capitalisation or re-capitalization
Source: IE
Previous Year Question
With reference to Convertible Bonds, consider the following statements:
1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2022 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (c)