India's green bonds find footing as stable 'greenium' underscores investor appetite

India's government raised 50 billion rupees, or $524 million, through a Friday sale of 30-year sovereign green bonds, Business Recorder reported. The greenium on that offering was four basis points, which lifted the average premium for the fiscal half-year to the same level, the highest since issuance began in the back half of fiscal 2023. Investors accept a lower yield on bonds funding environmentally sustainable projects, which is what the term greenium describes.

The total outstanding stock of India's sovereign green bonds now stands at 877 billion rupees, or $9.2 billion, after the latest sale. Notes maturing in 30 years have been issued in the largest volume, surpassing 500 billion rupees. Shobit Gupta, chief investment officer at Generali Central Life Insurance, linked the visible greenium to the balance between demand and supply in the market.

Insurers are managing a growing corpus with few suitable substitutes, which has prompted market participants to call for more supply. Sachin Bajaj of Axis Max Life Insurance argued that the market can take on a larger flow of green bonds in the latter half of FY27, especially if longer maturities dominate. Rahul Bhuskute of Bharti AXA Life Insurance said the steady pace of long-dated green bond sales over three fiscal years matches current demand.