“Around 13 issuances by civic bodies from states like Uttar Pradesh and Maharashtra ranging from ₹50 crore to ₹200 crore are in the pipeline,” a market participant said. “Two to three large issuances of around ₹1,000 crore are in the initial stage of discussion,” the person added.
This comes after the Union Budget presented earlier this month announced an additional incentive of ₹100 crore for a single bond issuance exceeding ₹1,000 crore by a civic body, as part of efforts to deepen the municipal bond market and encourage larger issues.
There has been a visible pickup in municipal bond activity in the current financial year. Data from the Securities and Exchange Board of India (Sebi) showed that nine municipal bond issuances were recorded until December 2025 in the current financial year, compared with three in the previous year and one in the year before that.
Apart from the municipalities which are repeat issuers, there were a lot of maiden issuances in the current financial year, which has boosted volumes. As of December 31, 2025, total outstanding municipal bonds stood at ₹3,783.9 crore, with ₹1,000 crore raised during calendar year 2025.
Market participants attributed the revival to improved disclosures, firmer credit metrics of select urban local bodies and sustained investor appetite for sustainable debt instruments.
On Tuesday, Nashik Municipal Corporation (NMC) announced its maiden public issue of green municipal bonds to raise ₹200 crore. Earlier, the civic body raised funds through a private placement of green bonds. There is an incentive of ₹10 crore for every 100 crore green bond issue for a municipal corporation, capped at ₹20 crore per issuer if it’s a subsequent issuance; new issuers get ₹13 crore per ₹100 crore, capped at ₹26 crore.
The bonds will offer a coupon of 8.05 per cent per annum, payable half-yearly, with an effective yield of 8.20 per cent per annum across investor categories — Category I (institutional investors), Category II (non-institutional investors) and Category III (retail individual investors).
The issue comprises rated, listed, taxable, unsecured, redeemable, non-convertible green municipal bonds in the nature of debentures with a face value of ₹1,000 each. The bonds are structured into eight separately transferable and redeemable principal parts (STRPPs), labelled A to H, with each STRPP carrying a face value of ₹125.
The proposed issue has received ‘Provisional IND AA+/Stable’ from India Ratings and Research and ‘Provisional CRISIL AA+/Stable’ from Crisil Ratings. Instruments with these ratings are considered to have a high degree of safety with respect to timely servicing of financial obligations and carry very low credit risk.
Proceeds from the issue will be earmarked for eligible green projects, including water supply augmentation, sewage treatment facilities, renewable energy initiatives and other climate-resilient urban infrastructure. In line with green bond norms, funds will be ring-fenced and deployed exclusively towards identified sustainable projects, with periodic disclosures on utilisation and environmental impact.
State-owned Canara Bank plans to raise up to ₹5,000 crore via 10-year Basel III-compliant Tier-II non-convertible debentures on Thursday. The issue has a base size of ₹2,000 crore with a greenshoe option of ₹3,000 crore. The bonds have a call option exercisable on the fifth anniversary from the deemed date of allotment, or on any anniversary date thereafter. Interest will be paid annually.
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