LMC BONDS OVERSUBSCRIBED 4.5 TIMES ON DEBUT AT BSE
This is the first municipal bond issue after the change in SEBI regulations for municipal debt securities in September last year
The Lucknow Municipal Corporation (LMC) raised Rs 200 crore via the issue of municipal bonds on private placement basis at a coupon rate of 8.5% at Bombay Stock Exchange (BSE) on Friday.
Municipal commissioner Ajay Dwivedi said, “LMC launched the municipal bond issue of Rs 100 crore with a green show option of Rs 100 crore on Friday at BSE. Just within a minute of bidding, the issue got oversubscribed 4.5 times with bids worth Rs 450 crore at Bombay Stock Exchange.” Urban development minister Ashutosh Tandon, Sanjay Prasad, secretary to the chief minister, principal secretary (urban development department) Deepak Kumar and municipal commissioner Ajay Dwivedi were present at the BSE office.
IN THE LAST FEW YEARS, URBAN LOCAL BODIES (ULBS) FROM MAHARASHTRA, TELANGANA, MADHYA PRADESH, ANDHRA PRADESH AND GUJARAT HAD RAISED FUNDS VIA MUNICIPAL BONDS.
The Lucknow Municipal Corporation (LMC) raised Rs 200 crore via the issue of municipal bonds on private placement basis at a coupon rate of 8.5% at Bombay Stock Exchange (BSE) on Friday.
Municipal commissioner Ajay Dwivedi said, “LMC launched the municipal bond issue of Rs 100 crore with a green show option of Rs 100 crore on Friday at BSE. Just within a minute of bidding, the issue got oversubscribed 4.5 times with bids worth Rs 450 crore at Bombay Stock Exchange.” Urban development minister Ashutosh Tandon, Sanjay Prasad, secretary to the chief minister, principal secretary (urban development department) Deepak Kumar and municipal commissioner Ajay Dwivedi were present at the BSE office.
In the last few years, urban local bodies (ULBs) from Maharashtra, Telangana, Madhya Pradesh, Andhra Pradesh and Gujarat had raised funds via municipal bonds.
Lucknow Municipal Corporation became the first urban local body from North India to issue municipal bonds and raised funds at the second lowest coupon rate after the launch of Smart City and AMRUT Mission. It was even cheaper than the coupon rate at which funds were raised by the municipal corporations of Ahmedabad and Surat, said municipal commissioner Ajay Dwivedi.
“This is the first municipal bond issue after the change in
SEBI (Securities and Exchange Board of India) regulations for municipal debt securities in September last year.
The funds raised through the bonds will be utilised for funding part of capital expenditure to be incurred on a residential project and a water supply project under AMRUT. The bonds are rated ‘AA’ from rating agency India Ratings and ‘AA(CE)’ from rating agency Brickwork,” Dwivedi added.
Urban development minister Ashutosh Tandon said, “The credit of the Lucknow Municipal Corporation (LMC) could be gauged from the fact that the bonds are issued at a coupon rate of 8.5% having a maturity of ten years.
The redemption of bonds will happen in seven annual instalments starting from the end of the fourth year till the end of the 10th year.
The bonds are backed by a strong structured payment mechanism with well-defined timelines and escrow of entire collections from property tax and fees and user charges for timely meeting of the interest and principal repayment obligations. LMC will also get an incentive of Rs 26 crore from the Central government for issuing the municipal bonds.”