The Greater Hyderabad Municipal Corporation (GHMC), which today raised Rs 195 crore from the bond market for the second time in six months, said it will mop up Rs 600 crore more in the course of the fiscal to fund some key infra development in the city.
It can be noted that the GHMC had raised Rs 200 crore in a maiden bond issuance in February this year at a coupon of 8.90 per cent, while today's issuance is priced at 9.38 per cent for a 10-year debt.
The Pune Municipal corporation had last year raised Rs 100 crore at 7.58 per cent and the Indore civic body earlier this year at 9.25 per cent, when the RBI rates were 50 bps cheaper.
The Rs 100-crore issue, rated AA by India Ratings and Care Ratings, was raised through an e-auction on the BSE and listed on the same exchange, and got oversubscribed by 2.5 times, and the corporation availed of the green-shoe option by 0.95 times taking the total amount to Rs 195 crore, GHMC commissioner B Janardhan Reddy told PTI this evening here.
He also said, "the corporation will hit the market again through the course of this fiscal year with nearly Rs 600 crore more of debt sales as it has a mandate to raise Rs 1,000 crore from the debt market."
With this GHMC becomes the first of the around 4,440 municipalities in the country to tap the bond market for the second time in a year and the fourth one to tap the market after the BMC, Pune municipality and the Indore civic body, which raised Rs 100 crore recently, said Ashish Sable, senior vice-president and head of debt capital market at SBI Caps, which was the sole arranger for the issue.
Sable further said the issue was lapped by pension funds, banks and non-banking financial companies.
Reddy said the money will be utilised to fund the strategic road development plan, which is part of a larger plan of GHMC where it proposes to provide skyways, conflict-free corridors and improve the overall travel time within city sans traffic jams.
The unsecured bond issue is backed by a structured payment mechanism under which property tax and fees and user charges collected by and due to GHMC will be deposited every month in a separate no-lien escrow account to servicing the bonds, under which investors will be paid the interest twice annually and the principal on maturity, Reddy said.
He added, since GHMC being the largest issuer of municipal bonds so far, prime minister Narendra Modi had recently recognised the corporation with a Rs 26 crore cash incentive, selected among 1,000 municipalities in terms of efficiency in tax collection and allover service deliveries.
Reddy said GHMC has had revenue of around Rs 3,500 crore in FY18, of which Rs 1,325 crore came in from property tax alone. Its debt stood at Rs 200 crore of bonds and Rs 100 crore loan from Hudco.
Reddy said for the ongoing Rs 3,500-crore strategic road development plan, the corporation will be approaching banks for Rs 1,500 crore for the first phase. The corporation has exhausted Rs 300 crore from internal accruals and Rs 200 crore from bonds already on the project.
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