16 smart cities are lining up plans to list their municipal bonds in the stock markets as civic bodies across the country plan to raise funds.
As many as 16 smart cities are lining up plans to list their municipal bonds in stock markets as civic bodies across the country clamor to raise funds in a hot race to stay ahead of peers in India’s smart cities sweepstakes.
Pune’s Rs 200-crore municipal bonds issue will hit BSE on June 22. Another 15 smart cities have already appointed transactional advisers, a sign that they will hit the market soon on lines of Pune.
Other cities include Jaipur, Jabalpur, Ahmedabad, Visakhapatnam, Indore, NDMC, Kakinada, Udaipur, Bhopal, Warangal, Kota, Bhiwadi, Kishangarh, Greater Hyderabad Municipal Corporation (GHMC) and Panaji, sources said.
Highlighting his government's drive on urban transformation, Minister of Urban Development and Housing & Urban Poverty Alleviation M Venkaiah Naidu had announced this week that the first municipal bond issue under this government from Pune Municipal Corporation (PMC) will be listed on the BSE on June 22.
While the government has granted permission to PMC to raise securities for the amount of Rs 2264 crore, it plans to raise bonds amounting to Rs 200 crore during the first tranche of it five-year bond programme.
PMC has earned itself a long-term credit rating of AA+ indicating a stable outlook. Pune is the second-largest corporation in Maharashtra earns the bulk of its revenues from property taxes and local body taxes. PMC plans to use the funds for a 24*7 water supply project for the city, as it attempts to meet its smart city mission.
Jaipur has earned a credit rating of A-, Ahmedabad has received an AA, Jabalpur an A-, Visakhapatnam an AA (SO), Indore an A+, NDMC an AA+, Kakinada a BBA rating, Udaipur a BBB+ rating, Bhopal an A- rating, Warangal has a A+ rating, Kota has earned a BBB+ rating, Bhiwadi a A- rating, Kishangarh an A+ rating, GHMC an AA rating and Panaji a BBB rating.
Since the last 20 years, close to 30 municipalities have raised a total of Rs 1,353 crore via taxable bonds, tax-free bonds and pooled financing. The largest of the offerings has been Bangalore Municipal Corporation’s Rs 125-crore bond issue in 1997 which was guaranteed by the state government, as per reports.
For Ahmedabad, this would be the fifth time the city’s civic body is hitting the bond market. Its first offering was for Rs 100 crore, without a state government guarantee, in January 1998.
Other cities have taken the capital market route through municipal bonds (without guarantee) include Nashik, Nagpur, Ludhiana, and Madurai. The proceeds have mostly been used to fund water and sewage schemes or road projects. Greater Visakhapatnam Municipal Corporation had issued bonds for Rs 30 crore in 2010.