The first Target Maturity Funds tracking Sovereign Green Bonds (SGrBs) in India have been filed by HDFC Asset Management Co Ltd (AMC), investment manager to HDFC Mutual Fund (MF): HDFC Nifty India Sovereign Green Bond (SGrBs) Jan 2028 Index Fund and HDFC Nifty India Sovereign Green Bond (SGrBs) Jan 2033 Index Fund.
SGrBs are bonds that the Government of India (GoI) has issued. The money from these bonds will be used to fund public initiatives that lower the economy’s carbon intensity.
“Target Maturity Funds, a new debt instrument, and Sovereign Green Bonds, an innovative financing strategy, are being combined by HDFC MF (TMFs). A larger audience of investors will be able to participate in sovereign green bonds with the introduction of these new programmes, which will also contribute to a greener planet “In a statement, the fund firm stated. TMFs are an open-ended passive investing strategy with a predetermined maturity date that tries to mimic the structure of a predefined fixed income index.
Green sovereign bonds
On January 25, 2023, the Indian government released its first sovereign green bond. The money from SGrBs will be used for government initiatives that help lower the economy’s carbon intensity.
In order to help investors understand the procedures and disclosures that would be followed for the issuing of such bonds, the government released the Green Bond Framework in November 2022. A “Green Finance Working Committee (GFWC)” has been established by the Ministry of Finance. The GFWC will meet at least twice annually to assist the Minister of Finance in choosing projects that fit the Framework.
In accordance with standard treasury procedure, the revenues will be put into the Consolidated Fund of India (CFI), after which money from the CFI will be made available for projects that qualify as green.