Seven Municipalities To Raise Rs 1,000 Crore Via Bonds

As much as seven municipalities are in talks to finalise their fundraising plans by way of bond issuances, with Varanasi, Prayagraj, Chennai and Pimpri-Chinchwad planning to launch their issuances in the next 10 days, two merchant bankers told NDTV Profit.

While Varanasi Nagar Nigam has already uploaded its seven-year bond for bidding on May 6, Pimpri-Chinchwad Municipal Corporation, Prayagraj Nagar Nigam and Greater Chennai Corporation are also likely to tap the bond market in the coming days.

Varanasi Nagar Nigam plans to raise Rs 50 crore through a seven-year green bond, another municipality to raise funds through green bonds will be Pimpri-Chinchwad, aiming to borrow up to Rs 200 crore.

Both green bonds are rated AA and AA+ by India Ratings and CRISIL Ratings, respectively.

Meanwhile, the municipal bodies of Prayagraj and Chennai also intend to raise up to Rs 200 crore each through bonds maturing in five to 10 years.

Prayagraj could hit the bond market as soon as this week, according to merchant bankers in the know. The bonds are rated AA by India Ratings and those of Greater Chennai Corporation are rated AA+.

Other municipal corporations such as Surat, Raipur and Coimbatore are also planning to raise up to Rs 150-200 crore each, but could hit the debt market by June as their credit ratings have not been finalised yet, a person involved in the transaction said.

So far in the current financial year, Agra Nagar Nigam has raised Rs 50 crore through April 2032 bond at a half yearly coupon of 8.15%.

Market participants are expecting state-owned banks, traders, pension funds and other state-owned entities such as National Bank for Financing Infrastructure and Development and India Infrastructure Finance Company to invest in such papers.

These bond issuances have come at a time when the government and the regulators have been taking concentrated efforts to boost the municipal bond market.

Recently, the National Stock Exchange launched a dedicated website for municipal bonds in a bid to enhance the credibility and visibility. The website will serve as a centralised hub for market participants, offering comprehensive data on the Indian municipal bonds market which will be called the Nifty India Municipal Bond Index.

Further, the government announced during the Union Budget of 2025-26 (Apr-Mar) that NaBFID will launch a partial credit enhancement facility, which aims to develop the bond market, including infrastructure and municipal bonds.