NSE Indices launches India’s first Municipal Bond Index

The Nifty India Municipal Bond Index tracks the performance of municipal bonds issued by Indian municipal corporations across maturities and having investment grade credit rating. 

“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 rating in the AA rating category. The index constituents are assigned weights based on their outstanding amount,” 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, which will be reviewed quarterly. It 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.

Mukesh Agarwal, CEO, NSE Indices, said, “The municipal bond market has a 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.. I am confident that with the launch of the Nifty India Municipal Bond Index, an impetus will be created for asset managers to consider investing in the municipal bond market thereby providing an investment vehicle to fixed income investors.”