HYDERABAD: In light of the financial crisis prevailing in Greater Hyderabad Municipal Corporation (GHMC) that has reportedly led to the hampering of the Strategic Road Development Programme (SRDP), the corporation has proposed a plan to raise Rs 2,500 crore through rupee term loan (RTL), instead of municipal bonds, to tide over the situation.
Meanwhile, the proposal to raise municipal bonds for the remaining Rs 505 crore of Rs 1,000 crore has been kept in abeyance in view of the volatile share market in the country, besides the high coupon rate.
During the review meeting, chaired by Municipal Administration and Urban Development (MAUD) Minister KT Rama Rao, on the progress of SRDP works a few days ago, it was brought to the notice of the authorities that the works were held up for want of funds. During the meeting, the Minister directed the GHMC authorities to expedite the mobilization of funds which have already been sanctioned. According to information, the project is to be funded by the issuance of municipal bonds worth Rs 1,000 crore and RTL worthRs 2,500 crore, as approved by the State government. SBI Capital Markets Limited was appointed as the arranger for raising the Rs 1,000 crore through bonds at a fee of 0.1 percent of the funds.
With this arrangement, the GHMC has issued three series of bonds -- series-1 (Rs 200 crore, coupon rate - 8.90 percent), series-2 (Rs 95 crore, coupon rate 9.38 percent), and series-3 (Rs 100 crore, coupon rate, 10.23 percent). In series-2, it was proposed to raise Rs 200 crore, but onlyRs 195 crore could be mobilised with a coupon rate of 9.38 percent. Whereas in series-3, it was proposed to raise Rs 305 crore (Rs 100 crore + Rs 205 crore in green shoe option), however only 100 crore could be mobilised with a coupon rate of 10.23 percent.
Meanwhile, GHMC officials said that the progress of the SRDP works require continuous and steady flow of funds. It was also observed that in view of the prevailing bond market conditions, it was essential to tap funds from RTL.
SBI Caps has also agreed to be the arranger for the RTL of Rs 2,500 crore with the same fee of 0.1 percent. Meanwhile, they expressed their confidence in arranging funds within 45 days at about 50 basis points above the SBI MCLR.
Low fund mobilisation
Despite continuous follow up and persuasion by GHMC authorities with SBI Caps, fund mobilisations are less than the bond issue amount with increased coupon rates. The GHMC officials said that the progress of the SRDP works require continuous and steady flow of funds