Sagarmala Finance plans India's first blue bond issue

New Delhi ( Vivek Ojha ) : Sagarmala Finance Corporation is set to launch India's first blue bonds this fiscal year. The state-owned lender aims to raise up to ₹1,000 crore through this maiden issue. These bonds will fund maritime projects, attracting investors interested in this sector. This move will help address the company's asset-liability mismatch. The corporation has a mandate to raise ₹25,000 crore.

The state-owned lender is preparing to launch its maiden bond issue soon to raise up to ₹1,000 crore. "This will be a ₹500 crore base issue, with a green shoe option of another ₹500 crore.

Trust Capital, AK Capital and Tipsons have been appointed advisers for the issue. The proposed blue bonds are aimed at investors seeking exposure to maritime projects. On Friday, the benchmark 10-year government bond yield stood at 6.996%.

Blue bonds bridge the important gap in sustainable financing activity by aligning investor appetite for sustainable assets with national development priorities. By imposing strict reporting requirements and due diligence of the proceeds for verified ocean projects, blue bonds reduce greenwashing risks while building investor confidence in an emerging asset class.

Officials said the planned fund raise would help address the lender's asset-liability mismatch. While its existing borrowings have an average repayment period of about 3.5 years, its loan assets typically have a gestation period of around 12 years.

India's blue economy encompasses fisheries, shipping, offshore energy, and coastal tourism. It contributes an estimated 4 percent to GDP and supports 4 million livelihoods.

What Makes Blue Bonds Different?

It would be wrong to consider blue bonds simply as rebranded green finance. These use-of-proceeds debt instruments direct capital exclusively toward sustainable ocean projects, thereby positively impacting coastal resilience infrastructure, marine protected areas, sustainable fisheries, and pollution control systems. Between 2018 and 2022, the global blue bond market grew from virtually nothing to $5 billion across 26 transactions, achieving a 92 percent compound annual growth rate. Although it still represents less than half a percent of the $1.6 trillion sustainable debt market.

The small island nation of Seychelles was the first to pioneer the issuance of the sovereign blue bond in 2018. It raised $25 million through a structure that combined traditional bond issuance with concessional loans from development banks. The proceeds funded marine spatial planning and expanded protected areas covering 30 percent of the nation’s exclusive economic zone. Belize followed in 2021 with a more ambitious debt-for-ocean swap, restructuring $553 million in commercial debt while committing to protect 30 percent of its ocean territory.