HYDERABAD: The Greater Hyderabad Municipal Corporation has successfully raised Rs 195 crore as the second tranche of funds through issue of municipal bonds. The GHMC had listed the bonds on BSE as it needs the money to fund the Strategic Road Development Plan (SRDP).
The bidding for the second tranche of bonds was conducted on the electronic bidding platform of Bombay Stock Exchange (BSE) in Mumbai on Monday for an issue size of Rs. 100 crore with Green Shoe Option of another Rs 100 crore. The issue received an excellent response and GHMC was able to raise Rs 195 crore at a cut-off coupon rate of 9.38 per cent. The overall subscription was almost 250 per cent but, showing financial prudence, the GHMC decided to retain only Rs 195 crore at the cut-off rate. It showed investors’ continued confidence in and support to GHMC once again.
The electronic bidding was conducted in the presence of Hyderabad mayor Bonthu Rammohan and GHMC commissioner B. Janardhan Reddy and additional commissioner (finance) D Jayaraj Kennedy, principal adviser to municipal administration and urban development department Jayashri Viswanathan and representatives of GHMC’s transaction advisers SPA Capital Advisors Ltd and arrangers SBI Capital Markets Ltd along with officials of Bombay Stock Exchange.
With this issuance, the Hyderabad civic body has become the largest municipal bond issuer in the country. It has also become the only municipal corporation to issue bonds twice in the last 10 years. All other issuers during that period, such as Pune and Indore municipal corporations, issued bonds only once.
The overall municipal bond market in the country, with the second tranche of GHMC bonds, has seen issuance worth Rs 2,200 crore to Rs 2,500 crore, thus giving a market share of almost 15 per cent to GHMC and indicating the confidence and its continued acceptance by the capital markets.
The municipal bond market has opened up a new funding window for urban local bodies (ULBs), which are efficient, regulated and cheaper source of funds for them. The GHMC was assisted in this process by arrangers SBI Capital Markets Limited and SPA Capital Advisors Limited who are the transactional advisers for this issue, Kennedy said.
The first tranche of bonds were raised in February this year for an amount of Rs 200 crore at a coupon rate of 8.90 per cent, with the issue receiving an overwhelming response and received 200 per cent subscription.
The mayor and the commissioner received an incentive of Rs 26 crore from prime minister Narendra Modi in Lucknow on July 28 for municipal bonds. The first tranche of Rs 200 crore was fully spent on the SRDP.