Civic bodies of New Delhi, Ahmedabad and Vishakhapatnam are set to raise funds by selling bonds after the Pune Municipal Corporation received bids for more than six times its Rs 200-crore offer.
The New Delhi Municipal Corporation is planning to raise Rs 200 crore from its first five-year bond issuance, two senior officials at the civic body privy to the development told BloombergQuint. The bond will hit the market this month and the proceeds will be used for infrastructure projects, mainly power, one of the two officials said. The corporation will gauge the response and then decide on further issuance, the official said.
Capital markets regulator Securities and Exchange Board of India had in 2015 cleared a new set of rules for issuing municipal bonds, giving better-rated civic authorities an opportunity to raise funds for infrastructure projects. Of the 94 municipal corporations rated by Crisil, the agency has assigned AA or above grades to 10, including Pune, which implies a low risk and a high degree of safety regarding their ability to make payments on time. A higher rating can help the issuer raise funds at a lower rate.
The municipal authority of Ahmedabad, rated AA, is also planning to raise Rs 200 crore from its first tranche of a 10-year bonds, Amish Shah, chief accountant, Amdavad Municipal Corporation, told BloombergQuint.
It would be a flexible bond. We will hopefully get an approval from the Ministry of Urban Development in the third quarter (October-December). It will be used to fulfill requirement for smart cities gap fund.Amish Shah, Chief Accountant, Amdavad Municipal Corporation
SBI Capital Markets is adviser to New Delhi and Ahmedabad corporations, confirmed Varsha Purandare, managing director and chief executive officer at the investment bank. The New Delhi civic authority didn't immediately respond to BloombergQuint's emailed query.
.png)
Also Read: Pick-Up In Municipal Bond Market Hinges On Government Support
The Greater Hyderabad Municipal Corporation in Telangana is planning to raise Rs 1,000 crore from bonds and Rs 2,500 crore from bank term loans, said D Jaya Raj Kennedy, additional commissioner (IT and Finance), Greater Hyderabad Municipal Corporation. “We will use these funds for strategic road development and building two-bedroom, hall, kitchen houses for low income group under affordable housing,” said Kennedy. The corporation is yet to get an approval from the government and expects to sell the bonds in two-three months, he said.
Vishakhaptnam is also planning to raise Rs 200 crore from its first bond issuance, said Anand Rao Gudaparthi, urban planner, Greater Visakhapatnam Municipal Corporation. The proceeds of the 10-year bond will be used for a treatment plant and water will be supplied to industries around Vizag, he said. The corporation is working on credit ratings and the bonds will be issued in two months, he said.
Also Read: Pune Municipal Corporation's Bond Issue Listed
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
