Winning Bizness Desk
Mumbai. Days after Lok Sabha elections 2024 concludes and Election Commission lifts Model Code of Conduct, the municipal bond market are going to intensify as at least 6 municipal bodies are in the line to enter into this arena. According to reports, the municipal bodies of 6 big cities like Nashik, Visakhapatnam, Kanpur, Surat, Varanasi and Prayagraj are preparing to raise money by entering the bond market, which are likely to issue municipal bonds by the end of July. This means that the next one and a half months are going to be very busy for the bond market. According to the report, these municipal corporations can raise Rs 100 crore to Rs 300 crore by issuing bonds. Investors can be offered a coupon rate of 7.9 percent to 8.3 percent on the bond issue.
To undertake various projects
The bond market has been the preferred medium of raising funds for municipal bodies of various big cities. Earlier, municipal bodies of many cities have launched municipal bonds to pursue infrastructure projects and meet their other financial needs. They include cities like Ahmedabad, Bhopal, Indore, Pune, Lucknow and Hyderabad. Municipal bonds of municipal bodies of Ahmedabad, Bhopal, Indore, Pune, Lucknow and Hyderabad have come between 2017 and March 2024. Those 6 municipal bodies together succeeded in raising about Rs 3 thousand crore through bonds. Apart from them, recently Vadodara Municipal Corporation raised Rs 100 crore by launching Certified Green Municipal Bond for Sustainable Water Infrastructure.
Opportunities opening for retail investors
At present, generally institutional investors invest money in municipal bonds launched by municipal corporations. However, efforts are also being made in this direction so that more and more retail investors can also participate in the bonds of municipal corporations. In this direction, the bond of Indore Municipal Corporation, which came last year, becomes important. In that issue brought for a solar power project, Indore Municipal Corporation was successful in raising Rs 244 crore. It was the first such public issue in which retail investors could also invest money.
