National Stock Exchange Unveils India’s First Municipal Bond Index
The National Stock Exchange (NSE) has recently launched the India Municipal Bond Index (IBMX), which is the country’s first-ever municipal bond index. The IBMX aims to track the performance of Indian Municipal Corporations’ bonds. The thriving municipal bond market in India has witnessed a three-fold increase in fund raising since 2017. In 2022, fundraising through Municipal Bonds reached ₹6,252 crore compared to ₹2,342 crore in 2017.
The IBMX includes 28 municipal bonds issued by 10 issuers, all with a credit rating of AA category. The bonds in the index are weighted in accordance with their outstanding amount. The index is calculated quarterly, using the total return methodology, including both price return and coupon return. Its base date is January 1, 2021, with a base value of 1,000.
The Indian municipal bond market got a boost when the SEBI’s Issue and Listing of Municipal Debt Securities Regulations, 2015 came into effect. The raised funds help municipal corporations finance new projects and improve civic infrastructure, as well as encourage them to become financially disciplined and governance-oriented.
Mukesh Agarwal, CEO of NSE Indices, expressed that the municipal bond market has the potential to finance the borrowing requirements of different municipal corporations in India. The proceeds from bonds issued by municipal corporations can be utilized to finance the expansion of essential municipal services through growth-driven infrastructure projects and contribute to bridging India’s urban infrastructure financing gap.
The IBMX is expected to provide transparency, encourage liquidity, and facilitate investment in the Indian municipal bond market.
The National Stock Exchange of India Limited (NSE) is a prominent stock exchange in India headquartered in Mumbai. It holds the record for being the largest derivatives exchange worldwide in terms of the number of contracts traded. Furthermore, it ranks as the fourth largest stock exchange in terms of cash equities, based on the number of trades conducted throughout the calendar year 2021.
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