Economy › Capital markets

Bond and debt markets

How the government and companies borrow by issuing bonds, and the market in which bonds trade.

Sovereign green bonds

Prelims and Mains

A sovereign green bond is what a government sells when it borrows for a green purpose, such as a solar park, rather than for anything else.

Whether investors value the promise shows only in what they will pay for it.
Price and yield move inversely, so heavy demand for a bond lowers the yield the issuer has to pay on it.
The greenium is that discount measured against a comparable conventional bond of the same issuer and tenure.
India has issued these bonds since 2022 to 23.
Insurers drive the demand in India, because green bonds count towards their infrastructure investments.

15 Aug 2026New
- The 30 year bond of August 2026 drew the highest average greenium since issuance began.
- The discount has held steady across issues rather than fading, which the government reads as a demand signal rather than a saving.
The Hindu, 15 Aug 2026: Sovereign green bonds show a steady "greenium" (opens in a new tab)

UPSC has asked