Municipal debt mkt may cross Rs 1,000-cr mark

The municipal debt market is expected to cross the Rs 1,000-crore mark from the present Rs 733 crore, a top rating agency official said.

"The municipal debt market is expected to cross the Rs 1,000-crore mark in two-three years time from the present Rs 733 crore as more municipal corporations have potential to raise funds through the debt market to meet their capital expenditure plans," Credit Analysis & Research (CARE) Deputy Managing Director D R Dogra told reporters here today.

According to Dogra, the Indian municipal debt market remains highly limited in total size as also in the number of participants.

With the total size of around Rs 733 crore and nine corporations participating, the municipal debt forms a minuscule part of the public debt market. This is in sharp contrast to some other developed and emerging economies, he said.

He said that in the United States, the bond market totals over $2 trillion and comprises over 10 per cent of the total debt market.

Moreover, many markets have also evolved sophisticated credit enhancement structures catering to their respective needs. Given the large number of smaller corporations and sub-investment grade municipalities that could possibly access the debt markets, building on existing enhancement models prevalent in India become important, he added.

CARE also announced the release of issuer ratings of 13 Urban Local Bodies (ULBs) as a part of an assignment under the Jawahalal Nehru National Urban Renewal Mission (JNNURM).