In a significant financial move, the Greater Chennai Corporation (GCC) has successfully secured a major funding boost for a critical environmental project. On Friday, the civic body raised ₹205.59 crore through its inaugural green municipal bond listed on the National Stock Exchange (NSE).
A Green Push for a Legacy Waste Problem
The capital raised is earmarked for the ambitious biomining project at the 342.91-acre Kodungaiyur dumpyard. This initiative aims to clear decades of accumulated legacy waste, a pressing environmental challenge for the city. The total cost of this remediation project is ₹648.38 crore, with GCC's share amounting to ₹385.64 crore. The successful bond issue now covers more than half of the corporation's financial commitment.
This 10-year bond issuance is historic for Chennai, marking its first-ever green bond and only its second municipal bond this financial year. The bonds were issued at an annual interest rate of 7.95%, which civic officials have described as a highly competitive borrowing cost for such a long tenure.
Overwhelming Investor Response and Financial Benefits
The market response was overwhelmingly positive. Against a base issue size of ₹100.03 crore, the GCC received bids worth a staggering ₹501.90 crore through NSE's e-bidding platform. This represents an oversubscription of 5.02 times, indicating strong investor confidence.
Deputy Commissioner (Revenue and Finance) M Birathiviraj confirmed that the funds were received on Friday. He explained that the repayment will be made every six months at the fixed interest rate to the lender, with the entire bidding process conducted online without the need to disclose lender details.
An additional advantage of funding through municipal bonds is a 20% incentive grant from the Union Government under the AMRUT 2.0 scheme. This grant will significantly reduce GCC's financial burden, aiding in quicker repayment and freeing up resources for other projects.
Credit Rating and Broader Financial Context
The bonds were assigned a rating of AA+ by both CARE Ratings and Acuité Ratings, reflecting the corporation's stable financial position and the robust structuring of the project.
This move into the bond market comes at a crucial time for GCC's finances. More than 60% of its ₹8,000 crore annual budget is consumed by administrative, operational, and salary expenses, leaving minimal room for new infrastructure projects. Furthermore, funding from international banks has recently dried up, pushing the civic body to explore newer avenues like municipal bonds for capital.
This is GCC's second foray into the bond market this year. In May 2025, it raised its first bond worth ₹200 crore, which was channeled into the Integrated Stormwater Drain (ISWD) project in the Kosasthalaiyar Basin. The success of the green bond issue sets a precedent for funding future large-scale urban environmental projects in Chennai and potentially other Indian cities.
