CHENNAI: The Greater Chennai Corporation (GCC) on Monday listed municipal bonds worth Rs 200 crore on the National Stock Exchange (NSE), becoming the first civic body in Tamil Nadu to do so. The listing event at Kalaivanar Arangam was presided over by Chief Minister M.K. Stalin.
With this move, Chennai joins cities like Bengaluru and Ahmedabad, which have also raised funds through municipal bonds on the NSE.
The GCC raised Rs 200 crore at an interest rate of 7.97% per annum over a 10-year period. Against a base issue size of Rs 100 crore, the bond issue received bids worth Rs 421 crore on the NSE’s electronic bidding platform 4.21 times the base size, officials said.
NSE’s Chief Economist, Tirthankar Patnaik, congratulated the GCC and said it was encouraging to see urban local bodies using capital markets as an alternative funding source. He also mentioned that municipal corporations in Coimbatore, Tiruppur, and Tiruchy are in the process of raising ₹100 crore each through similar bonds.
The funds raised will be used for the Integrated Storm Water Drainage Project (ISWDP) in the Kosasthalaiyar Basin, aimed at improving flood protection and sustainable water management in North Chennai. The area includes 8 major lakes and 71 smaller water bodies. The project is being implemented in three phases, covering a total of 46 packages. As of 22 May, 30 packages have been completed, with work ongoing on the remaining 16.
Once completed, the project is expected to double the water retention capacity of the area, reduce flooding during monsoons, and help address water shortages during summer by channelling excess rainwater into connected lakes.
The GCC's municipal bonds have received a credit rating of ‘AA+’ from India Ratings and Acuité Ratings. The Tamil Nadu government has also provided support through the Project Sustainability Grant Fund (PSGF) to encourage investor confidence.
GCC Commissioner J. Kumaragurubaran stated that the Corporation plans to issue more bonds to help fund the upcoming ₹822 crore multi-modal transport hub at Broadway bus stand. Of this, ₹570 crore will be contributed by the GCC, while ₹500 crore is expected to be raised through bonds.
He explained that borrowing from banks would incur higher interest rates (between 8.7% and 8.9%), whereas municipal bonds offer a lower rate of 7.97%. Additionally, under the AMRUT 2.0 scheme, the Union Government provides an incentive of Rs 13 crore for every Rs 100 crore raised via municipal bonds. This means the GCC will receive Rs 26 crore as support from the Centre for its Rs 200 crore bond issue.