The inaugural sovereign green bond (SGrB) issuance by the government on Wednesday received a good response, with the five-year paper and the 10-year paper drawing subscriptions of about three times and five times, respectively, the reported amount.
The five-year SGrB received 96 bids totaling ₹13,525 crore against the notified amount of ₹4,000 crore. The RBI, which is the government debt manager, accepted 32 competitive offers totaling ₹3,993.124 crore and two non-competitive offers totaling ₹6,876 crore. The cut yield for this paper was 7.10 percent.
The 10-year SGrB received 170 bids totaling Rs 19,367 crore against the notified amount of Rs 4,000 crore. The RBI accepted 57 competitive offers totaling ₹3948.646 crore and four non-competitive offers totaling ₹51.354 crore. The cut yield for this paper was 7.29 percent.
Ajay Manglunia, MD & Head, Investment Grade Group, JM Financial, said: “SGrB’s inaugural auction went well and attracted good interest from investors. The price was also good: the yield was about 5 to 6 basis points lower than the corresponding maturity government security.
“Looking at the initial demand, the next union budget may propose increased resource raising (around Rs 40-50 crore vs. Rs 16 000 crore in FY23) through the SGrBs route.”
RK Gurumurthy, Head of Treasury, Dhanlaxmi Bank, noted that the price (cut) and demand suggest there will be tremendous appetite for similar issues. Cutting performance was quite a bit lower than the corresponding vanilla G-Sec on the fly.
“Perhaps, in the next fiscal year, we can see a considerable jump in the issuance size of the SGrB,” he said.
