India’s first-ever Euro Green Bond

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In news– Recently, Power Finance Corporation Ltd (PFC), the leading NBFC in the power sector, has successfully issued its maiden Euro 300 million 7-year Euro Bond issuance.

Key updates-

• 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.
• The pricing of 1.841 per cent achieved is the lowest yield locked in by an Indian issuer in the Euro markets.

What are Green Bonds?

• 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.  
• The European green deal of 11 December 2019 underlined the need to better direct financial and capital flows to green investments. 
• The European green deal investment plan of January 2020 announced that the Commission would establish an EU green bond standard (EUGBS).
• EUGBS is a voluntary standard to help scale up and raise the environmental ambitions of the green bond market.

NextGeneration EU Green Bonds framework-

• The NextGenerationEU Green Bond framework is a step forward towards enabling the Commission to issue up to some €250 billion green bonds, or 30% of NextGenerationEU’s borrowing.
• The framework was prepared by the European Commission, which will issue the NextGenerationEU green bonds on behalf of the EU.
• The framework provides information to investors about how their investments in green bonds will be used, and how the Commission intends to report on the use of proceeds.

The framework centres around four main pillars–

1. Use of proceeds.  
2. Process for expenditure evaluation and selection.  
3. Management of proceeds. 
4. Reporting.  

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