GCC raises Rs 206 crore via green municipal bond
CHENNAI: The Greater Chennai Corporation has announced it has raised `205.59 crore through its first-ever green municipal bond, which will be listed on the National Stock Exchange (NSE) on January 12. This is the second municipal bond to be issued by the civic body this financial year.
The funds raised will be used for the bio-mining and remediation of the Kodungaiyur dumping ground, a major environmental infrastructure project undertaken by the corporation. The project covers around 252 acres of the total 342.91 acre site, and involves the scientific processing and removal of legacy municipal solid waste accumulated over several years. The total cost of the project is Rs 648.38 crore, of which the city corporation’s share is Rs 385.64 crore.
According to an official release, the issue of the bond witnessed an overwhelming response from the investors.
Against a base issue size of Rs 100.03 crore, bids worth Rs 501.9 crore were received through the electronic bidding platform of NSE, resulting in an oversubscription of 5.02 times. This shows the investors’ strong confidence in GCC’s financial credentials and project structuring, the release said.
The bond has been raised for a tenure of 10 years at a competitive coupon rate of 7.95% per annum. The GCC green bond has also been rated ‘AA+’ by CARE Ratings and Acuite Ratings.
As a first-time issuer of a green municipal Bond, GCC is also eligible for an incentive of Rs 10 crore for every `100 crore raised, subject to a maximum of Rs 20 crore incentive amount from the union government under the AMRUT 2.0 scheme. This will help reduce the GCC’s overall cost of borrowing, the release said.
In May last year, the GCC had listed municipal bonds worth `200 crore on the NSE, becoming the first civic body in Tamil Nadu to do so. The amount was raised at an interest rate of 7.97% per annum over a 10-year period. Against a base issue size of Rs 100 crore, the bond issue received bids worth Rs 421 crore on the NSE’s electronic bidding platform, which is 4.21 times oversubscribed.