Three Gujarat civic bodies may tap bond mkt in Oct-Nov, sources say
Informist, Friday, Sep 8, 2023
By Subhana Shaikh
MUMBAI – Three municipal bodies in Gujarat–Ahmedabad, Vadodara and Surat-—are looking to tap the corporate bond market during Oct-Nov with green bonds maturing in five years, sources aware of the development said.
Ahmedabad Municipal Corp, Vadodara Municipal Corp and Surat Municipal Corp cumulatively plan to raise up to 5 bln rupees through these issuances.
"Ahmedabad is likely to wait for the state approval and VMC (Vadodara Municipal Corp) has the approval already. But most likely they will hit the market by Oct-Nov. Even Surat is planning a bond issue and its timeline is the same," a source involved in the transaction told Informist.
"Ahmedabad is looking to raise 150–200 crores (1.5-2 bln rupees), but the amount is not fixed yet. Vadordara's amount is fixed, and it will be 100 crores (1 bln rupees). Surat is going for 200 crores (2 bln rupees), the source said.
In January, Informist Media had exclusively reported that Ahmedabad and Vadodara municipal corporations are getting their basic approvals to issue bonds.
CRISIL Ratings has assigned 'AA+' rating to the proposed bonds of Ahmedabad Municipal Corp and Surat Municipal Corp and 'AA' rating to Vadodara Municipal Corp's issue.
"The proceeds will be utilised for financing green projects such as waste management, clean water," sources said.
Infrastructure players such as National Bank for Financing Infrastructure and Development, state financial services and banks, and provident funds are likely to show interest in these papers, sources said.
Pimpri Chinchwad Municipal Corp is the only municipal corporation to tap the bond market in the current financial year. It had raised 2 bln rupees through bonds maturing in five years in July at a semi-annual coupon of 8.15%. The issue was fully subscribed.
The government has been taking a number of initiatives to encourage municipal corporations to raise funds through the corporate debt market in order to boost urban infrastructure.
On other municipal corporations hitting the corporate bond market, market participants said they may take time.
"…their documents are yet to come, they don't have the documents ready as of now. They are yet to convert their balance sheets into English language from regional languages, so that process will take time, could take a year as well," another source said. End