India's muni bond market expands as nearly dozen cities set for debut issues

MUMBAI, May 20 (Reuters): Close to a dozen Indian cities are set to issue municipal bonds for the first time this year, according to three merchant bankers, as a regulatory and fiscal push boosts a fledgling market.

Authorities have long sought to push municipal bonds that are typically used to finance urban projects ranging from transportation to sanitation in the world's most populous country that is rapidly urbanising.

Investors are also gradually taking greater interest in the market that was once plagued by concerns over opaque finances.

Over the past two years, regulators have pushed for regular financial updates while the government has offered fiscal incentives, boosting activity.

At least seven municipal bodies in the western Indian state of Maharashtra are prepping issues worth at least 33 billion  rupees ($340.8 million), according to the merchant bankers, who declined to be named as they are not authorised to speak to media.

The cities include several that encircle the financial capital Mumbai: Navi Mumbai, Panvel, Thane, Kalyan-Dombivli and Mira-Bhayandar.

The Municipal Corporation of Greater Mumbai, the nation's richest local body, has yet to tap the bond market.

Others looking to sell bonds this year include Chhatrapati Sambhaji Nagar and Nagpur in Maharashtra, Ujjain in central India, and Shimla, Moradabad and Gorakhpur in north India.

None of the city corporations responded to Reuters' emails seeking comments.