MUMBAI - India's Vadodara Municipal Corporation has raised 1 billion rupees ($12.07 million) by issuing Asia's first certified green municipal bond, the civic body said in a press release on Friday.

The civic body from the western Indian state of Gujarat has set a semi-annual coupon of 7.90% on the issue, for which it invited bids from investors earlier in the day.

The proceeds from the issue will be used to build and enhance liquid wastewater management infrastructure across the city.

"The issuance by the Vadodara Municipal Corporation marks a watershed moment for sustainable municipal finance, not just in India but across Asia," Sean Kidney, chief executive officer of Climate Bonds Initiative, said.

"It exemplifies how local governments can harness green finance to catalyse critical investments in environmental infrastructure, aligning with urgent global climate objectives," Kidney added.

The bonds are rated AA+ by India Ratings and have received a green security certificate from the Climate Bond Initiative.

SBI Capital Markets and Tipsons Consultancy Services are the arrangers for the bond issue.

Officials from the U.S. Treasury Department provided technical assistance to the civic body for the fundraising.

The Vadodara civic body last accessed the bond market in 2022, raising 1 billion rupees via bonds maturing in five years at a semi-annual coupon of 7.15%.

($1 = 82.8600 Indian rupees)

(Reporting by Bhakti Tambe; Editing by Sohini Goswami)