NSE unit launches first Municipal Bond Index
Feb 24, 2023
Synopsis
The Nifty India Municipal Bond Index tracks the performance of municipal bonds issued by Indian municipal corporations across maturities and has investment-grade credit ratings. The index includes municipal bonds issued as per the Securities Exchange Board of India Issue and Listing of Municipal Debt Securities Regulations, 2015.
NSE’s index services subsidiary, NSE Indices Limited on Friday launched India’s first-ever Municipal Bond Index, Nifty India Municipal Bond Index at a SEBI workshop on Municipal Debt Securities in Bengaluru.
The Nifty India Municipal Bond Index tracks the performance of municipal bonds issued by Indian municipal corporations across maturities and has investment-grade credit ratings. The index includes municipal bonds issued as per the Securities Exchange Board of India Issue and Listing of Municipal Debt Securities Regulations, 2015.
Presently, the index has 28 municipal bonds issued by 10 issuers all having credit ratings in the AA rating category. The index constituents are assigned weights based on their outstanding amount.
"Raising money from capital markets incentivizes municipal corporations to fund new projects and improve civic infrastructure while encouraging them to become financially disciplined and governance oriented," the statement said.
The index is computed using the total return methodology including price return and coupon return. The index has a base date of January 01, 2021, and a base value of 1000. The index will be reviewed quarterly. The index is expected to act as a benchmark for asset managers and be a reference index tracked by passive funds in the form of Exchange Traded Funds (ETFs), index funds and structured products.
"The municipal bond market has the potential to play a pivotal role in financing the borrowing requirements of different municipal corporations in India. The proceeds from bonds issued by municipal corporations can be utilized to finance the expansion of essential municipal services through growth-driven infrastructure projects & can contribute to bridging India’s urban infrastructure financing gap," Mukesh Agarwal, CEO of NSE Indices, said.
NSE Indices Limited, a subsidiary of NSE, provides a variety of indices and index-related services for the capital markets. The company focuses on the index as a core product. The company owns and manages a portfolio of indices under the Nifty brand of NSE, including the flagship index, the NIFTY 50. NSE Indices also maintains fixed income indices based on Government of India securities, corporate bonds, money market instruments and hybrid indices.
[The Economic Times]
