There’s an interesting backstory behind India’s sovereign bond issuance. The idea was approved in the Union Budget around two years ago, with a goal of raising up to $10 billion through sovereign bonds. Internal opposition grew, and the proposal was eventually scrapped after the PMO interfered.
In this context, the Indian government’s recent plan to issue $3.3 billion in sovereign green bonds is significant.
Sovereign green bonds are similar to any other government-issued sovereign bond. The only difference is the use of the cash raised, which can only be used for activities and initiatives that reduce carbon emissions, such as renewable energy, green hydrogen, and rechargeable batteries.
These green bonds have a reduced cost of capital because they provide carbon neutrality benefits to their buyers.
The problem is likely to debut in the market in the first or second quarter of FY23, with the finer specifics to be revealed later. This will be the first tranche, and if there is sufficient demand for green bonds, the centre may consider selling more than $3.3 billion in green bonds.
This problem represents a significant shift in the Indian economy’s commitment to a low-carbon future. Costs and other details are still being worked out.
To some extent, India’s venture into green bonds mitigates the risk of sovereign bonds. Because sovereign bonds are usually denominated in hard currencies like the US Dollar or the Euro, they tend to increase the issuer’s liabilities if the native currency falls.
This step will also help India achieve its objective of becoming carbon neutral and net-zero emissions by the year 2070.
While the 10-year benchmark sovereign bond yield is currently about 6.85 percent, the government expects to be able to borrow at a lower rate through green bonds.
That will be the key draw, because it may not make sense for India to take on the risk of national debt unless the difference is large enough. This is in line with the global surge in renewable energy, sustainable business models, and sustainable strategy.
Indian conglomerates such as Reliance and Adani have committed billions of dollars to green projects such as renewable energy, green hydrogen, electric vehicle batteries, and electric vehicle ecosystems.
India, the world’s third-largest emitter of greenhouse emissions, wants to double its renewable energy producing capacity by 2030. The timing is right for the launch, with global investor and lender enthusiasm for green firms at an all-time high.
At Zebu we spend a lot of time reading news and articles that cover a wide range of topics, including investment analysis, psychology, technology, etc. We have been sharing our favorite reads with clients under our weekly‘Zeal to read’ *****The most contrarian thing of all is not to oppose the crowd but to think for yourself. — Peter Thiel *****
News you may use After Covid Dip, TV Advertising Volumes Grow 22% In 2021: BARC Airlines line up new flights as govt allows regular international opsAt $632bn, India’s forex kitty 5th highest globally Cabinet approves formation of National Land Monetisation Corp for sale of surplus govt land, buildings Central bank digital currency has seen rolling out this year: Finance minister Nirmala Sitharaman Central PSUs achieve 80% of FY22 capex target by Feb-end Current account deficit could breach 3% mark for first time in a decade: ICRA report Data released by the National Statistical Office (NSO) on Friday showed the index of industrial production (IIP) rose an annual 1. 3% in January, from an upwardly revised 0. 7% in December. Economic growth at 7.8%, oil price rise a dampener: S&P Global Ratings Equity MFs log Rs 19,705-cr net inflow in Feb amid market volatility Established Residential Realtors’ Topline To Grow 35% In FY22: Report Exports of Agri, processed food up 23% in April-January For the fifth month in a row, the GST collections crossed Rs 1.3 lakh crore mark. Economic growth at 7.8%, oil price rise a dampener: S&P Global Ratings Equity MFs log Rs 19,705-cr net inflow in Feb amid market volatility Established Residential Realtors’ Topline To Grow 35% In FY22: Report Exports of Agri, processed food up 23% in April-January For the fifth month in a row, the GST collections crossed Rs 1.3 lakh crore mark.
*****
Views may be of use 43 Pieces of Advice From an Ancient Egyptian Vizier to His Son Around the year 2350 BC, a man named Ptahhotep was vizier to the pharaoh of ancient Egypt. The vizier was the highest-ranking official in ancient Egyptian “government”, and usually the right-hand man of the pharaoh. Ptahhotep was therefore a successful man, entrusted by his king to bear a big part of the burden of running the country. Even almost 4500 years ago, Egyptian society was already sophisticated enough to have built the great pyramids of Giza. The government was busy. They were implementing large-scale architectural projects, they were administering the country’s judicial system, they were ensuring an adequate supply of food and water to its cities, and they were collecting taxes from Egypt’s citizens to keep the whole thing funded. It was a complex operation, and if the pharaoh appointed Ptahhotep to be the head of the organization, it meant that he was probably an individual who knew what to do and how to get it done. Source:https://roadwithoutend.com/43-pieces-of-advice-from-an-ancient-egyptian-vizier-to-his-son-201fbff75a2b A few basic questions One way to revert to simple is to explicitly ask ourselves the most basic questions about how each of us thinks about investing. Each of us has an investment process that hopefully (a) gels with who we are, and (b) works over the long run. Revisiting tenets of that process can help clear the mind in murky times and strengthen conviction to act on the implications of that process. Source:https://buggyhuman.substack.com/p/a-few-basic-questions?s=r Zeikel’s Rules Act. Make decisions. No amount of information can remove all uncertainty. Have confidence in your moves. Better to be approximately right than precisely wrong. Take the long view. Don’t panic under short-term transitory developments. Stick to your plan. Prevent emotion from overtaking reason. Market timing generally doesn’t work. Recognize the rhythm of events. Remember the value of common sense. No system works all of the time. History is a guide, not a template. Source:https://thereformedbroker.com/2022/03/08/zeikels-rules/ Mental time travel is a great decision-making tool — this is how to use it That’s why an important element of imagination training is to fill your brain with what I call “clues to the future,” concrete examples of new ideas that might shape how your future turns out. When you have a hippocampus full of clues, your brain will have better data to draw on, and the scenes you construct will be way more interesting Source:https://ideas.ted.com/mental-time-travel-is-a-great-decision-making-tool-this-is-how-to-use-it/ First Principles: The Building Blocks of True Knowledge Reasoning from first principles allows us to step outside of history and conventional wisdom and see what is possible. When you really understand the principles at work, you can decide if the existing methods make sense. Often they don’t. Reasoning by first principles is useful when you are (1) doing something for the first time, (2) dealing with complexity, and (3) trying to understand a situation that you’re having problems with. In all of these areas, your thinking gets better when you stop making assumptions and you stop letting others frame the problem for you. Source:https://fs.blog/first-principles/ Naval Ravikant: 21 Staggering Insights About Wealth and Happiness from a Global Thought Leader Comparison is not only the thief of joy, but it’s also always a feature of multi-player games, where you’re competing against everyone else. An internal game, however, would be something like raising a child to be the best person they could be, completing a marathon by yourself, or building a business that you’re proud of. Source:https://medium.com/better-advice/naval-ravikant-21-staggering-insights-about-wealth-and-happiness-from-a-global-thought-leader-8321be4cd8e3 10 Lessons I’ve Learned from 10 Years Pursuing Financial Independence This driver for happiness is behind nearly everything we do. But figuring out what sort of life is going to be fulfilling and bring us purpose is a personal journey. The sooner you identify the key drivers of your happiness, the quicker you can start to plan out your ideal life. I know life sometimes feels really complicated and stressful but at the end of the day, we’re still just another animal on Earth whose needs and desires haven’t changed that much over the ~50,000 years we’ve been roaming around. In 1943 an American psychologist called Abraham Maslow published a paper called “A Theory of Human Motivation” which included the now very famous Maslow’s hierarchy of needs. Source:https://www.aussiefirebug.com/10-lessons-ive-learned-from-10-years-pursuing-financial-independence/
