Indore Municipal Corporation Lists India’s First Green Municipal Bonds on NSE
Indore Municipal Corporation, established under the Madhya Pradesh Municipal Corporation Act, 1956, successfully listed its public issue of rated, listed, taxable, secured, redeemable, non-convertible green municipal bonds on NSE on February 21, 2023.
The issue size had four categories – Institution/QIB, Corporate, HNI, and Retail. The Institution/QIB category was subscribed the most at 7.52 times, followed by the Corporate category at 6.70 times, Retail category at 5.78 times, and HNI category at 3.62 times. The Green Bonds have a tenor of 3, 5, 7, and 9 years. The Green Bonds have been assigned a rating of ‘CARE AA: Stable’ by CARE Ratings Limited and ‘IND AA+/Stable’ by India Ratings & Research Private Limited.
Shri Shivraj Singh Chouhan, Chief Minister of Madhya Pradesh, said on the listing event that Indore is a city that thinks and does outside the box. The municipal corporation has planted at least 2 lakh saplings to improve air quality, registered 4 lacs carbon credits, generated a revenue of Rs 9 crore under a business model, and installed a power plant at Jalud.
Indore’s Mayor, Shri Pushyamitra Bhargava, expressed his gratitude towards Shri Shivraj’s vision of making Indore the world’s leading smart city. Shri Ashishkumar Chauhan, MD and CEO, NSE, praised the launch of the Green Bond issue by Indore Municipal Corporation, stating that it is an excellent example of cooperative federalism and the depth of the local governance model in India.
Urban local bodies need to keep up with the expansion and upgrades to existing urban infrastructure, and municipal bonds provide an alternative means of financing to reduce dependency on central and state grants.
The public issue of Indore Municipal bonds got an overwhelming response with an overall subscription of 5.91 times the issue size, indicating good investor appetite for Green bonds. The global green bond market has crossed the milestone of 2 trillion USD, and India has witnessed green bond issuances of about 10.8 billion USD during 2019-2022. Green Municipal bonds will bring in new foreign investors who specialize in sustainable financing and invest in projects with environmental, social, and governance considerations.
NSE is committed to playing an active and participatory role in contributing towards India’s vision of a sustainable future.
Shri AK Mittal, AK Capital Services Ltd, Lead Manager to the Issue, congratulated Indore Municipal Corporation for raising India’s first public issue of green municipal bonds of INR 244 crores at highly competitive rates, which were subscribed almost 6 times over. The bonds provide a secured investment with an attractive return for investors.
What are Green Bonds?:
Debt securities known as green bonds are specifically intended to finance environmentally sustainable projects. India’s market for municipal bonds is expanding rapidly, with funds raised increasing threefold since 2017. The Indore Municipal Corporation has submitted an application for another round of fundraising worth ₹250 crore.
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