AMC seeks to go first with Rs 1,000-cr bond issue

The Ahmedabad Municipal Corporation (AMC) is set to become the first civic body to issue a ₹1,000 crore bond in FY27, two people aware of the matter told ET. This would mark the largest municipal bond issuance in India to date.

The move gains significance in the context of the Union budget, which offers a ₹100 crore incentive to municipal bodies raising ₹1,000 crore through bond markets, effectively lowering borrowing costs by 1-1.5 percentage points.

Approvals from the standing committee and other internal bodies are still pending, with key details such as tenure to be finalised, the people cited above said.


The largest issuance as of now is from the Indore Municipal Corporation, which raised ₹244 crore in early 2023. India's municipal bond market remains nascent, with total outstanding issuances standing at around ₹4,340 crore.

"A ₹1,000 crore bond raise will be done based on how large the municipal body is. Even if the corporation is cash rich, the incentive of additional ₹100 crore is lucrative, as it reduces the borrowing cost by 1-1.5 percentage points," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap, a debt advisory firm.

The budget incentive on large sized bonds targets large cities with considerable budgets, led by Mumbai, Bengaluru, Delhi, Ahmedabad and Pune. AMC currently has outstanding bonds of ₹400 crore, while Greater Hyderabad MC has the largest outstanding of ₹495 crore, Sebi data showed.