Vadodara: The Vadodara Municipal Corporation (VMC) is preparing to launch a ₹200-crore public issue of blue municipal bonds, aiming to mobilise funds for sustainable water-resource projects and strengthen civic infrastructure financing. The move follows a strong investor response to the corporation’s earlier bond issues and marks a step toward wider public participation, with retail investors also expected to be eligible to subscribe.

What are municipal and blue bonds?

Municipal bonds are debt instruments issued by local self-government bodies such as municipal corporations or municipalities to raise funds from the public. In return, investors receive fixed interest at regular intervals, and the principal amount is repaid on maturity.
Blue municipal bonds are a specialised category used to finance projects that protect, restore, or sustainably manage water resources, such as water-supply systems, sewage treatment, and related urban infrastructure.

Standing committee clears process

After announcing the blue-bond proposal in the budget, the VMC placed a resolution before its standing committee seeking approval for the appointment of agencies and the procedural steps required for the public issue. The proposal has been cleared, and the municipal commissioner has been authorised to proceed with the issuance process.

Strong track record of earlier bond issues

The VMC has previously issued municipal bonds twice, raising ₹100 crore in 2022 and another ₹100 crore through globally certified green bonds in 2024, offered at coupon rates of 7.15% and 7.9% respectively. Both issues were heavily oversubscribed, with the 2024 green bond drawing subscriptions of around 14.6 times, reflecting strong investor confidence.

The corporation also received central government incentives for successful bond mobilisation, effectively lowering borrowing costs compared to conventional bank loans.

Notably, Vadodara became the first municipal corporation in Asia to obtain international certification for green municipal bonds linked to pollution-control and sewage-treatment infrastructure projects.

Public participation planned

Unlike earlier issues that were largely limited to institutional investors, the upcoming blue-bond issue is expected to allow participation from retail investors, high-net-worth individuals, and corporate entities. The minimum investment is likely to be structured in accessible denominations to encourage citizen participation and deepen public engagement in city development.

With the proposed blue municipal bond, Vadodara aims to set another national benchmark in innovative urban financing while addressing critical water-management needs through sustainable infrastructure investment. DeshGujarat