Ahmedabad Municipal Corporation raises Rs 200 cr for water, solid waste projects
Ahmedabad Municipal Corporation (AMC) has raised Rs 200 crore through a five-year bond issue Friday which will be used for water and solid waste management projects in the city. This is the fifth such fundraising by the city, which was also the first one to tap this route way back in 1998. Its last issue was in 2005 and other cities, including Pune, Indore and Bhopal have done bond issuances recently. After opening at 1130 hrs, the issue saw a high investor response, with bids worth Rs 1,085 crore being received before the subscription was closed. The civic body was targeting to raise Rs 100 crore and used the green-shoe option to retain bids of another Rs 100 crore.
"The money will be used for projects under the AMRUT scheme, and makes us eligible for grants of Rs 250 crore from the Centre," AMC commissioner Vijay Nehra told PTI over the phone. He said the corporation will also be eligible for getting additional grants from the Centre for having raised money through the market and added that the response to the issue may lead to more such issuances. He, however, did not specify the coupon rate at which the money has been raised but said the pricing is very competitive.
Investment banking sources said it is priced at 8.7 per cent and claimed to be a competitive price given the fact that it is an unsecured instrument with an AA+ rating and also because of the "perception issues" faced by municipal bodies and their finances. This is a taxable, unsecured bond with no sovereign guarantee, Nehra said, adding the issue saw interest from domestic primary dealers and pension funds. As in other issues from municipal bodies like Pune, Indore and Bhopal, SBI Caps was the sole advisor and arranger for the issue. Surat is likely to be the next city to hits the debt market by March, sources said.
(With inputs from agencies.)