India's first blue bond draw nears as issuers line up, bankers say

MUMBAI: India’s first blue bond sale is imminent as a state-run financial institution and a local civic body aim to tap the novel debt market before the end of September, according to a company official and two merchant bankers.

Blue bond is market nomenclature for debt securities that are used to fund ocean- and water-related projects, targeting investors that have a mandate to invest for environmental protection. Globally, over $15 billion in blue bonds had been issued by mid-2025, according to the World Bank.

The two potential issuers are Sagarmala Finance Corp, which is a state-owned maritime-focused lender, and Vadodara Municipal Corp, which runs a local body in India’s western state of Gujarat.

Sagarmala Finance Corp Managing Director L.V.S. Sudhakar Babu told Reuters that the financier, which is eyeing up to 10 billion rupees ($104.5 million) of such bonds, could tentatively target the last week of September for the sale.

Sagarmala finances projects that strengthen India’s maritime ecosystem, last-mile port connectivity, shipbuilding, inland waterways and coastal road networks.

India’s maritime lender set to launch country’s first blue bond, top exec says

Vadodara, hometown of Indian Prime Minister Narendra Modi, is awaiting approvals to go ahead with a 2 billion rupee issue, the bankers said, requesting anonymity as they are not authorised to speak to media.

India Ratings has assigned “AA+” rating for the Vadodara bonds, which would be used to fund capital expenditure for a pump house, a water treatment plant and a clear water reservoir.

The municipal body did not respond to a Reuters email seeking comment.

A growing market

A large investor expects the size of Indian municipal bond market to at least double to $1 billion by the end of the financial year.

Rajkiran Rai, Managing Director at National Bank for Financing Infrastructure and Development, expects fresh issuance of at least 50 billion rupees through March.

Over the last nine years, 22 cities from ​seven states have ​raised around 45 billion ⁠rupees, including 17.50 billion rupees in the last fiscal.

“We will endeavor to support most of these issuances,” Rai said.