Municipal bonds are making a welcome comeback but need mega reforms

One solution for the poorly rated municipal corporations can be to access the bond market through pooled finance

Municipal bonds, better known as muni-bonds, are making a welcome comeback. Last week, Madhya Pradesh became the first Indian state to list its bonds on the National Stock Exchange — the response was decent as the bonds, issued by Indore Municipal Corporation, were oversubscribed 1.26 times. The corporation retained Rs 1.40  billion. That was enough for the Madhya Pradesh chief minister to declare that cities like Gwalior, Bhopal and Jabalpur will follow suit with Rs 2 billion bonds each.

The bonds issued by Indore, the business capital of MP, offered 9.25 per cent with 10-year maturity. Indications are that some