Roopa Kudva, managing director, Crisil, pointed out a number of issues related to issuance of municipal bonds, which are yet untouched in India. Giving a presentation during a seminar on the topic on Monday, she said, ?Unlike in the US where almost 16% municipal bodies, (urban local bodies, ULBs), have come out with some sort of municipal bonds, there were even less than 1% of municipal bodies in the country that have come out with their bonds.?
Kudva said that investor?s perception of municipal governance was poor in the country. She also raised a number of issues related to the subject. First among them being the increasing need for long term paper by both institutional and retail investors. As against the US, where municipal bonds constitute 12% of the bond market, it was less than 1% in India. On the constraints related to municipal bonds, Kudva said that investors’ perception of municipal governance was poor in the country. Moreover, limited number of local bodies with adequate credit strength was also creating problems before the municipal bonds market to grow.
