Hyderabad: The Greater Hyderabad Municipal Corporation (GHMC) on Tuesday said it would raise Rs. 1,000 crore from the bond market.
On the directions of Chief Minister K. Chandrashekhar Rao and the Municipal Administration Minister K. Tarakarama Rao, the Greater Hyderabad Municipal Corporation (GHMC) undertook the task of floating the municipal bonds last year.
As a precursor to the issuance of bonds, the GHMC undertook the process of securing Credit rating from reputed agencies to act as evidence of its financial robustness and economic soundness. The instrument of the GHMC was examined by CARE and India Ratings and rated as AA (stable). This rating is an improvement from the rating issued by the CARE last year which stood as AA negative la.
This stands as a testimony to the constantly improving financial robustness of the Corporation and highlights the commitment of the organisation towards adherence to principles of sound economic governance.
This AA stable rating accorded is an evidence of the strong administrative structure and financial stability of the Corporation, a status whichmany State Governments aspire to but have not been able to secure till date.
The Corporation would be utilising the amount raised from the bond market exclusively for executing the Strategic Road Development Project which aims to scale up the roads of Hyderabad with a view to minimize travel time, increase journey speed thereby cutting down on delays and also simultaneously minimizing the fuel consumption.
An amount of Rs 1000cr would be raised from the bond market out of which electronic bidding for the first tranche of Rs 200 crore was done on February 14. The issue evoked overwhelming response and received 200% subscription. The total tranche of 200 crore was subscribed at 8.9%.
It may be noted that this the second municipal bond floated in recent times after Pune Municipal Corporation raised bonds of 200cr. Further, in the last 50-60 years, the municipal and other local civic bodies have managed to raise 2000crores approximately and therefore the success of this issue is a historic and a watershed moment in the financial governance of the local bodies.
This event is momentous as it shall serve not only as a trigger for enhancing the municipal bond market in the country but also promote financial prudence and discipline due to oversight mechanisms put in place by the SEBI.
The GHMC was ably assisted in this process by the arrangers SBI Capital Markets Limited and SPA Capital Advisors Limited who the transactional advisors for this issue. (INN)