Hyderabad civic body raises Rs 200 crores via bonds

Hyderabad civic body raises Rs 200 crores via bonds
Feb 2018 , by , in Latest News

The Greater Hyderabad Municipal Corporation, on February 14, 2018, raised Rs 200 crores by selling 10-year bonds, becoming only the second civic body to tap funds from this route this financial year, after its counterpart in Pune. Proceeds from the issue, which was oversubscribed two times at a coupon of 8.9 per cent, would be used to fund a strategic road project in Hyderabad that is estimated to cost Rs 3,518 crores.

The municipality is planning to raise Rs 1,000 crores from bond sales in tranches. It will be financing Rs 1,000 crores for the project and raising the remainder from loans. “Hyderabad is a city of 10 million, with a 1,000-km road network. We need to improve the traffic junctions and make traffic hassle-free, by reducing travelling time,” municipal commissioner B Janardhan Reddy said.

The bond issuance has been rated ‘AA’ (stable) by credit rating agencies and was oversubscribed by two times. The issue was managed by SBI Caps, which was also the sole i-banker for the Rs 200-crore bond sale by the Pune Municipal Corporation (PMC) in June 2017. SBI Caps president and chief operating officer Ashwani Bhatia said, there is an overwhelming investor response for municipal bonds. “Four more cities with high credit ratings are in the pipeline, which are expected to hit the markets over the next few months. They are expected to raise Rs 1,000 crores from these issuances,” Bhatia said.

The PMC had, in June 2017, raised Rs 200 crores by selling 10-year bonds, becoming the first civic body to tap money through this route in 15 years. That issue was oversubscribed over six times or Rs 1,200 crores from 21 investors spanning across insurance companies, mutual funds, nationalised banks and long-only pension funds. Till date the total amount raised in municipal bonds is Rs 1,095 crores.

 

 

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