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What Is a Green Bond?

What Is a Green Bond?

Power Finance Corporation Ltd (PFC), the leading NBFC in power sector, has successfully issued its first ever Euro Green Bonds.

  • It is the first ever Euro denominated Green bond issuance from India.
  • Moreover, it is the first ever Euro issuance by an Indian NBFC and the first Euro bond issuance from India since 2017.

What Is a Green Bond?

  • A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.
  • These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.​
  • Green bonds may come with tax incentives to enhance their attractiveness to investors.
  • The World Bank is a major issuer of green bonds. It has issued 164 such bonds since 2008, worth a combined $14.4 billion. In 2020, the total issuance of green bonds was worth almost $270 billion, according to the Climate Bond Initiative.
  • Green bonds work just like any other corporate or government bond.
  • Borrowers issue these securities in order to secure financing for projects that will have a positive environmental impact, such as ecosystem restoration or reducing pollution.
  • Investors who purchase these bonds can expect to make as the bond matures.
  • In addition, there are often tax benefits for investing in green bonds.

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