MUMBAI: The Securities and Exchange Board of India (Sebi) has urged pension funds and insurers to support municipal bond issuances to help develop this nascent market.
“I urge pension funds and insurance companies and others to look at increasingly supporting municipal bond issuances,” an executive director with the markets watchdog Pramod Rao said at an Assocham-organised corporate bond market summit here on Friday.
Municipal bonds are debt instruments like an NCD or any other debt instrument, issued by municipal corporations with the permission of the respective state governments. While municipalities have collectively raised Rs 1,940 crore from 12 issues, the total outstanding was only Rs 2,184 crore. As against this, the US municipal bonds market is worth $4 trillion.
Also, the total outstanding corporate bonds are worth Rs 47.29 lakh crore, while that of Central government bonds are worth Rs 100.7 lakh crore. There is no cumulative data available on the outstanding amount of state government bonds.
Rao said bond issuances have exceeded $105 billion in FY25, while equity raising topped $25 billion, underlining the depth of the domestic bond markets.
Rao further said Sebi is eager to partner corporates on sustainable finance, transition and net-zero goals through the bond market route, and is also looking forward to discussions with asset management companies and other financial institutions on the issue. In this regard, the regulator recently introduced the norm of once listed, always listed for corporate bond issuers.
To make it easier, the Sebi has made the technology side of it simpler by making distributed ledger technology neutral to bridge the information asymmetry between issuers and debenture trustees in the system who rely on new disclosures and information flow about the status of compliance.
Just like mutual funds, the corporate bonds industry also should take measures to build trust and confidence of retail investors, Rao said.