Context:
India Exim Bank has listed its 10-year $1billion sustainability bond on Sustainable Bond Market platform at London Stock Exchange.
- India Exim Bank finances and facilitates India’s international trade. In January, it had raised $1 billion issuing 10-year Sustainability Bond under its Environmental Social Governance Framework.
Sustainability Bonds:
- They are specifically designed to raise money for environmentally and socially responsible initiatives.
- Sustainability Bonds combines the features of Green and Social Bonds.
- Till June 2022, the Sustainable bond market had reached $2.9 trillion.
About Sovereign Green Bonds (SGrB):
- What are 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.
- What are 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.
- Key features of framework –
- Principles for ‘green project’ classification:
- Encouraging energy efficiency.
- Reducing carbon and greenhouse gases emissions.
- Promoting climate resilience and/or adaptation.
- Values and improves natural ecosystems and biodiversity in accordance with SDG principles.
- 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.
- Principles for ‘green project’ classification:
Additional Information
- Ghaziabad Nagar Nigam (GNN):Issued India’s 1st Green Municipal bond.
- Blue Bond: It is a relatively new form of debt instrument that is issued to support investments in healthy oceans and blue economies.
- Rupee-denominated Bonds or Masala Bonds: It is a term used to refer to a financial instrument through which Indian entities can raise money from overseas markets in the rupee.
- Kerala – 1st Indian state to issue Masala Bonds
Source: Livemint
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)
