Municipal Bond Index

What is in the News ?

• NSE’s index services subsidiary, NSE Indices Limited on Friday launched India’s first-ever Municipal Bond Index, Nifty India Municipal Bond Index at a SEBI workshop on Municipal Debt Securities in Bengaluru.
• The Nifty India Municipal Bond Index tracks the performance of municipal bonds issued by Indian municipal corporations across maturities and has investment-grade credit ratings. 
• The index includes municipal bonds issued as per the Securities Exchange Board of India Issue and Listing of Municipal Debt Securities Regulations, 2015.

Municipal Bonds

• A municipal bond is a type of bond issued by a local government or municipality, such as a city, county, or state.
• When these entities need to raise money to fund projects like building schools, roads, or other public infrastructure, they can issue bonds as a way to borrow money from investors.
• The municipal bond market has seen a three-fold rise in fundraising since 2017 (to about 6000 crores in 2022)
• The first municipal bond in India was issued by the Ahmedabad Municipal Corporation in 1998
• Indore issued India’s first-ever municipal green bond recently.

IBMX

• National Stock Exchange (NSE) launched India’s first municipal bond index- IBMX.
• It will track the performance of bonds issued by municipal corporations.
• It has investment-grade credit ratings (AA category)
• The index includes municipal bonds issued as per the Securities Exchange Board of India Issue and Listing of Municipal Debt Securities Regulations, 2015.

Practice Questions for Prelims

Which of the following Municipal Corporation was the first to issue Municipal Bond in India ?
a) Ahmedabad Municipal Corporation
b) Nagpur Municipal Corporation
c) Indore Municipal Corporation
d) Bengaluru Municipal Corporation
Ans. a)

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