GHMC TO RAISE RS.305 Crore WITH MUNICIPAL BONDS

The Greater Hyderabad Municipal Corporation (GHMC) which has decided to issue the third tranche of municipal bonds to raise Rs 305 crore is closely monitoring the market trends for a right time to float the bonds.

All these funds are to be exclusively used for improving the city infrastructure including flyovers, underpasses and other facilities under Strategic Road Development Programme (SRDP) as was done the last year.

The civic body has already issued municipal bonds in two tranches and it’s standing committee which met recently has approved the move to issue third tranche to generate Rs 305 crore for SRDP. Last year, bonds were issued in February for an amount of Rs 200 crore followed by the second one in August for Rs 100 crore.

The first tranche of bonds were issued at a coupon rate of 8.90 per cent with the issue receiving 200 per cent subscription. With the second tranche, the GHMC was able to raise Rs 195 crore at a cut off coupon rate of 9.38 per cent. The overall subscription was almost 250 per cent but showing financial prudency, the civic body decided to retain only Rs 195 crore at the cut off rate, said a senior official from GHMC.

The investor’s support and continued confidence on the municipal corporation was evident as the issue received good response. After a gap of almost a year since the second tranche was issued, the municipal corporation is now gearing up for the third tranche.

However, it has decided to wait for the market to stabilise a bit and for the conducive time. “Our consultants inform us that as per the current market trend, the coupon rate is prevailing around 9.6 per cent. This according to them is not right time and they have advised us to wait for a right time,” the official said.

Further, the GHMC also plans to raise another Rs 500 crore through the bond market during the current financial year, depending upon the prevailing market conditions.