Published: Thu, February 15, 2018
Medical | By Johnnie Horton

Greater Hyderabad Municipal Corporation raises Rs 200 cr on BSE BOND platform

Greater Hyderabad Municipal Corporation raises Rs 200 cr on BSE BOND platform

The municipality is planning to raise Rs 1,000 crore from bond sales in tranches.

The Greater Hyderabad Municipal Corporation has raised Rs 200 crore by issuing bonds on private placement basis using the BSE BOND platform. "There is also a good investor appetite for the municipal bonds".

The unsecured bond issue is backed by structured payment mechanism, whereby property tax and fee and user charges collected by and due to GHMC will be deposited every month in separate no-lien escrow account for debt servicing of bonds.

"Hyderabad is a city of 10 million with a 1,000 km road network".

Dr B Janardhan Reddy, municipal commissioner, GHMC said, "GHMC is a fore runner in reforms by providing better civic amenities".

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Earlier in June a year ago, Pune bonds, rated as AA+, offered 7.59%, about 30-40 basis points more than bonds sold by state governments. That issue was oversubscribed over six times or Rs 1,200 crore from 21 investors spanning across insurance companies, mutual funds, nationalised banks and long-only pension funds.

On June 19, 2017, Pune Municipal Corporation was the first Municipal Corporation to successfully raise Rs 200 crore on the BSE Bond platform. "They are expected to raise Rs 1,000 crore from these issuances", Bhatia said.

Till date the total amount raised in municipal bonds is Rs 1,095 crore.

The Hyderabad deal assumes significance as the government wants urban local bodies to meet their funding requirement through municipal bonds for various infrastructure projects. These will have to be funded by market borrowings in addition to government grants.

The rate offered is about 74 basis points and 134 basis points higher, respectively, than the Telengana and Andher Pradesh state bonds, going by the latest RBI auction of state development loans (SDLs), a platform where state governments raise money by selling bonds.

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