Kochi Corp eyes bonds to shed cash-strapped tag

He said the proposal will be placed before the corporation council for a decision.

Kochi Corporation building (File photo| EPS)

KOCHI: Kochi Corporation has decided to explore the option of issuing bonds to raise funds for development works as it looks to get rid of its image of being a ‘cash-strapped’ civic body. With this, it will become the first local body in Kerala to tap the debt instrument for resources.

The corporation officials will soon meet a consulting firm to discuss the possibilities and criteria for analysing which bond – municipal (also known as muni-bonds) or green – would be apt for the coastal city. The civic body is exploring the option of selling the bonds to retail investors or a private placement with institutional investors, said sources.

“Discussions are at a preliminary stage. We have initiated informal talks with Green Design & Engineering Services Pvt Ltd (Green), a Gujarat-based engineering, designing and consulting firm, to understand the requirement and criteria for issuing bonds,” said Kochi corporation secretary Babu Abdul Khader. He said the proposal will be placed before the corporation council for a decision.

Informal talks held with firms on bonds: Mayor

Though a new concept for Kerala, muni-bonds are popular among leading Indian cities as a means to generate revenue. Bengaluru became the first city to raise funds through bonds in 1997. Since then, Ahmedabad, Pune and Hyderabad have tapped muni-bonds route to generate money for development activities.

In comparison, green bonds is a newer concept. Ghaziabad became the first local body to generate funds through green bonds, raising Rs 150 crore in 2019 at an interest rate of 8.1%.“Green bonds are different from normal-regular bonds as they emphasise on sustainable development projects,” said Khader. “Through initial discussion, we aim to understand the criteria and also whether green bonds are suitable for the city,” he said.

Corporation officials are also looking at the possibility and conditions required for issuing green bonds to analyse the success percentage of the move. A report will be prepared for the mayor and council’s approval.

“The Kochi corporation expressed interest in issuing muni-bonds or green bonds and informal talks were held with a few rating firms through a senior government official,” said Mayor M Anilkumar.

Criteria for issuing green bonds
No negative net worth for the past 3 years
No default in repayment of debt securities & loans availed from banks or non-banking financial firms in the last year
No record of default in payment of interest & repaying principal concerning debt instruments