Indore's civic body launches India's first municipal bond to fund solar power project
The green bonds to raise money for 60 MW power project, are up for sale till February 14th.
Infrastructure bonds or Infrastructure Investment Trusts (InvITs) which consist of debt instruments linked to development projects, are a secure way of investing in roads, power plants and bridges. They are used by the government or corporations to raise debt for infrastructure projects, and can deliver returns for investors from the income generated through toll tax and power distribution. Now the Indore Municipal Corporation has become the first Indian civic body to raise funds by selling bonds.
The aim behind the country's first ever issue of municipal bonds is to finance a Rs 244 crore solar power plant. The base size of the bond sale is Rs 122 crore and an oversubscription of another Rs 122 crore is possible. The green bonds to raise money for 60 MW power project, are up for sale till February 14th.
Although this is the first time municipal bonds are available on the market, civic bodies of Bengaluru and Ahmedabad have previously sold such instruments to institutional investors. But when the Jawaharlal Nehru National Urban Renewal Mission was launched in 2005, municipal corporations stopped issuing such bonds. These debt instruments are also a way to contribute to the development of water supply, roads and drainage in the city.
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