LUCKNOW: More municipal organisations in Uttar Pradesh (UP) will use the capital market to pay for costs associated with development projects. Following the lead of Lucknow and Ghaziabad, other civic bodies will also issue municipal bonds.
Varanasi, Kanpur, Agra, and Prayagraj Municipal Corporations have been given the go-ahead to begin the bond issue preparations by Amrit Abhijaat, Principal Secretary, Urban Development in UP. These bonds would be between Rs 100 and Rs 100 crore in size and lodged with financial institutions. Abhijaat said that the civic bodies needed money to enhance infrastructural facilities and continue work on various initiatives in these cities.
Mahamilind Lal, the Financial Controller of Jal Nigam, has been assigned by the Government of Uttar Pradesh, as the nodal officer for the bond issues. For floating bond issues, municipal corporations would enlist the assistance of the nodal officer. The credit rating firms have also been asked to provide the municipal corporations with a credit rating.
The UP government had permitted the municipal corporations in Lucknow and Ghaziabad to issue bonds in 2019 which were highly successful. These corporations were then rated by companies that the Securities Exchange Board of India has approved. The Lucknow Municipal Corporation was the first local government in Uttar Pradesh to issue a bond for Rs 200 crore. The financial institutions were invited to subscribe to this bond issue.
The credit rating firms CRISIL, Rickworth, and Samayara assigned the Lucknow Municipal Corporation’s bond issue a Double A rating, and AK Capitals oversaw its management. Bombay Stock Exchange (BSE) listed the Lucknow Municipal Corporation’s bond issuance.
Ghaziabad Municipal Corporation had collected Rs 150 crore from the capital market by the end of 2020 through its bond issue. Out of this, Rs 100 crore came from the base issue, and Rs 50 crore came from the “green shoe” option. On the BSE bidding platform, this bond issue had 40 online bids totaling Rs 401 crore. There was a four-fold oversubscription.