Maiden Tranche of Sovereign Green Bonds

The Government of India issues bonds to support environmental projects. These bonds that bring in resources to implement such climate-related projects are called Sovereign Green Bonds. They are similar to government securities. The first tranche, meaning the first part or portion of the Sovereign Green Bonds, was recently launched. The net worth of the Green Bonds launched is Rs 8,000 crores. The Sovereign Green Bonds were launched by the Reserve Bank of India.

Coupon Rates of the Bonds

Two different types of bonds have been launched. The Bond maturing in 2028 and the ones maturing in 2033. The 2028 bonds coupon rate is 7.10 and the 2033 coupon rate will be 7.29%.

What is Coupon Rate?

The yield paid by security is called the coupon rate. Let us understand this in simple terms. The bonds are very much similar to government securities. Say John buys sovereign green bonds. Assume he buys the 2028 maturing bond. John can now buy loans by placing these bonds in banks. With this loan amount, John will now start an environmental project, say a solar water heater business or a rainwater harvesting business. But what are coupon rates? John will pay interest to the Government for using the bond as collateral. This interest is called the coupon rate.

Month: Current Affairs - January, 2023

Category: Economy & Banking Current Affairs