India to enter green bond market with $1 billion debut auction on Wednesday

If this sovereign auction is over-subscribed and the cutoff yield materially lower than regular government bonds, it would encourage larger green issuance next year

India’s first sovereign green bond will go to auction Wednesday, and policy makers have laid the groundwork to ensure a successful debut. 

Authorities have promoted the 80 billion rupee ($984 million) issue to the country’s biggest domestic asset managers, including state-run insurers and pension funds as well as foreign investors. The insurance industry regulator will allow the bonds to count toward insurers’ required infrastructure investments. Banks can use it toward mandatory government holdings, and there’s no limit for foreign buyers. 

“We expect strong demand for India’s first issuance of sovereign green debt from both domestic as well as