India moves green bonds worth $1.2 billion to index-tracking menu

By Ronojoy Mazumdar and Catherine Bosley  India made Rs 10,000 crore ($1.2 billion) of green bonds potentially eligible for inclusion in JPMorgan Chase & Co’s flagship emerging market debt index, just months after having stoked controversy by removing some planned tenors. 

Environmentally friendly notes with a 10-year maturity to be issued in the second half of the 2024-2025 fiscal year will be included in the index-eligible fully accessible route category, the central bank said in a statement late on Thursday, without offering a reason. 

 

The announcement comes just three months after India imposed controls on foreign ownership of some newly issued bonds with 14-year and 30-year tenors. The rationale offered for the limitations at the time was to concentrate demand at the front end of the curve, though the surprise move also suggested officials were growing uneasy with the tens of billions of dollars of overseas funds headed for the local market. 

 

While the government imposes limits on foreign ownership in much of its debt market, there are no such restrictions on the roughly three dozen FAR securities. 

 

India joined JPMorgan’s EM bond index in late June, a watershed moment that helped global funds invest in the debt market that’s one of the world’s best performers, but has been difficult to access due to tight regulations.