Municipal bonds offer India's cities a critical funding solution for urban infrastructure development. As urbanization accelerates with 600 million projected city dwellers by 2036, Urban Local Bodies face mounting pressure to modernize infrastructure while maintaining livability. Municipal bonds, debt instruments used to finance transit systems, water sanitation and sewerage projects, remain underutilized despite first issuance by Bengaluru in 1997. Currently only 29 municipal corporations have issued bonds totaling 4,240.3 crore rupees. The primary barrier is credibility, with most ULBs either unrated or below investment grade, preventing public bond issuance under Sebi's BBB minimum rating requirement.
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