Sebi to make corporate, green bonds investor friendly

At present, corporates tap overseas market to raise funds via green bonds

The board of the Securities and Exchange Board of India (Sebi) in its meet on Monday is expected to ease norms for trading in corporate bonds. The regulator is also likely to frame the guidelines to list the so-called green bonds on domestic exchanges.

To make the bond market transparent and investor friendly, Sebi will address the issue of listing of such privately placed bonds on the exchange platform for secondary market transactions.

Typically, a company issues bonds to a select set of investors to raise funds. The current regulatory regime allows such listing but there is not much activity on the exchange. Market participants say the regulator needs to structure a framework for such bonds so that transactions on the bourses increase.

Norms soon

Sebi is also expected to announce the norms for raising money through green bonds. As the name suggests, these bonds are for those who want to invest in environment-friendly projects such as clean water and energy or even waste management.

Currently, corporates in India tap the overseas market to raise funds through green bonds due to greater awareness. Also, there are dedicated investors overseas interested in such instruments.

Besides creating a framework for green bonds, the Sebi could also look at providing incentives for issuance of such bonds in the domestic market.

“Development of the bond market has been under discussion for many years now,” said a market participant on conditions of anonymity. “The regulators will have to provide some incentives to issuers to stop them from going overseas. Investors in India are also well aware of issues such as carbon emission, climate change and renewable energy. If green bonds are offered here, there will be enough demand.” He did not wish to be named as he has held discussions with Sebi officials on this issue.

Some of the Indian entities that have issued green bonds are Exim Bank, Yes Bank and IDBI Bank. A statement issued by IDBI Bank said that it has raised $350 million by issuing green bonds. The issue was subscribed three times and investors included asset managers, banks and corporates. While around 82% of the allocation was done to Asian investors, the rest was made to European entities, as per the statement.