Patna to raise Rs 200 crore via municipal bonds

Mumbai: Patna Municipal Corporation is set to become the first issuer to tap the municipal bond market this fiscal year, ending a period of inactivity in a segment where investors help finance the buildout of crucial civic infrastructure. The civic body plans to issue 10-year bonds worth ₹200 crore, with bidding scheduled for October 30. This will be the first municipal bond by Bihar.

ET had reported in its July 3 edition that Patna would tap the bond market.

Kanpur municipality, too, is expected to raise ₹125 crore in the coming months. Kanpur Nagar Nigam got its ratings reaffirmed on Tuesday by CareEdge Ratings.

The last municipal bond issuance was by Nashik in early March 2026. The Brihanmumbai Municipal Corporation (BMC), which was expected to launch India’s biggest municipal bond issue this year, has stayed on the sidelines, likely due to higher yields.

The 10-year yield has increased to 7.44% on Wednesday from 6.90% a month ago. However, Patna Municipal’s ₹200 crore issue has already been presold, sources told ET.

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“Entities like HUDCO and NaBFID have already given their bids. AK Capital is one of the arrangers of this paper,” said a person aware of the details. The rate is expected to be 150-175 basis points above the 10-year benchmark yield.One basis point is a hundredth of a percentage point.

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Municipal bonds gained traction as the Centre stepped up efforts to encourage urban local bodies to tap debt markets through targeted incentive schemes during the budget.