After the huge success of Pune Municipal Corporation's (PMC) municipal bond offering worth Rs. 200 crore, a total of 26 cities are set to hit the market with their municipal bond offerings in the next three years' time as per the ministry sources. The municipal bond issue of PMC with an interest rate of 7.59% received subscriptions totaling to approximately Rs. 1200 crore. The investors to the issue were major banks, mutual fund houses, pension funds and insurance companies.

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The cities that are said to come up with muni bonds include Kolkata in West Bengal; Navi Mumbai, Pimpri Chinchwad, Pune, Nashik, Mira Bhayandan, Thane, Vasai-Virar city in Maharashtra; GVMC and Vijaywada in Andhra Pradesh; Ahmedabad, Surat and Vadodra in Gujarat; NDMC in Delhi; Kishangarh, Jaipur, Bhiwadi, Jhunjhunu in Rajhasthan; Warangal in Andhra Pradesh; Indore, Bhopal and Jabalpur in Madhya Pradesh; Lucknow in UP and Mangaluru in Karnataka. These all cities for their muni bond issue are rated with A+ and above credit rating.

Few of the cities have appointed transactional advisers for the municipal bond issue that include Jaipur, Ahmedabad, Jabalpur, Indore, Vishakapatnam, NDMC, Indore, Kakinada, Bhopal, Udaipur, GHMC or Greater Hyderabad Municipal Corporation, Warangal, Bhiwadi, Kota, Kishangarh and Panaji.

The largest municipal bond issue offering has been that of Bangalore Municipal Corporation worth Rs. 125 crore floated in the year 1997 backed by the State government.

New Delhi Municipal Corporation (NDMC) municipal bonds issue shall be worth Rs 200 crore and is likely to hit the market shortly. "We are currently working on the statutory compliances," say sources in NDMC. The issue bears a credit rating of AA+. Surat's municipality is also to mop up funds through the issue of municipal bonds. "It is at an initial stage. The process of consultation is currently on. The amount raised will go into drinking-water project that will cost around Rs 450 crore," said M Thennarasan, Municipal Commissioner, Surat Municipal Corporation.

Ahemdabad's civic body shall hit the market for the fifth time with its bond offering. Greater Vishakapatnam is also to hit the market with its muni bond issue.

These cities which are part of the Smart Cities Mission as well as Atal Mission for Rejuvenation and Urban Transformation (AMRUT), their credit ratings in the range of AAA and D shall decide how these would raise capital and on what terms and conditions.

Sources say these municipal issue offering have been backed by the government as the municipalities decide to pay tax on the interest.

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