Sagarmala Finance Corporation to Issue India's First Sovereign Blue Bond

India's Sagarmala Finance Corporation to Issue Country's First 'Blue Bond'

India's Sagarmala Finance Corporation is poised to make history by issuing the country's first 'blue bond', a debt security aimed at raising funds for ocean- and water-related projects. The move is part of the company's efforts to diversify funding sources and lend towards developing maritime and coastal infrastructure.

A blue bond is a type of debt security that targets investors with a mandate to invest in bonds with an environmental focus, similar to 'green bonds' used to fund climate change-related projects. While green bonds have seen significant growth, Sagarmala's debt would be a first-of-its-kind blue bond in India.

Globally, just over $15 billion in blue bonds had been issued by mid-2025, according to World Bank data. Notably, Asia's first blue bond was issued by the Bank of China in 2020, while some island nations like Seychelles have also raised debt via such securities.

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Sagarmala, India's state-owned maritime-focused lender, plans to raise up to 10 billion rupees ($105.08 million), including a greenshoe option of 5 billion rupees. The company's Managing Director, L.V.S. Sudhakar Babu, has stated that the bond issue will be used for longer term borrowing to address the company's existing asset-liability mismatch.

The table highlights the mismatch between Sagarmala's existing term loans and the average tenor of loans it disburses. The company's existing term loans have an average tenor of 3.5 years, while the average tenor of loans it disburses is about 12 years.

Trust Capital, AK Capital, and Tipsons have been appointed as advisers to the bond issue, which is yet to be finalized. The company's plans to raise the bond were put on hold due to the volatile market conditions, with India's benchmark 10-year yield rising around 35 basis points since the start of the U.S.-Iran war.

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Established in 2016 under India's Ministry of Ports, Shipping and Waterways, Sagarmala received a non-banking financial company licence in June 2025. The company is also seeking a 20-billion-rupee equity infusion from the government to maintain a healthy debt-to-equity ratio as it expands its loan book.

In addition, Sagarmala administers the government's 250-billion-rupee Maritime Development Fund, which includes a 50-billion-rupee Interest Incentivisation Fund, allowing it to provide interest subsidies to borrowers. The company plans to raise as much as 100 billion rupees in financial year 2027 to finance projects that strengthen India's maritime ecosystem.