Virendra Singh Rawat
Lucknow / Apr 1, 2021
Ghaziabad Municipal Corporation (GMC) has become India’s first urban centre to issue green municipal bonds worth Rs 150 crore.
The GMC has mopped up Rs 100 crore and Rs 50 crore in base issue and green shoe option respectively, thus totalling Rs 150 crore in proceeds. The issue was subscribed four times compared to the base issue.
Against the municipal bonds worth Rs 150 crore, the Corporation yesterday received 40 online bids totalling Rs 401 crore on the digital bidding platform of Bombay Stock Exchange (BSE). The bonds were subscribed at 8.10 coupon rate, which is among the lowest in the municipal bonds space in India.
Since, the issue was subscribed in less than a minute of the start of the bidding process, the Yogi Adityanath government termed it as the reinforcement of investors’ confidence in the UP growth story and good governance in the state.
Meanwhile, the bonds’ proceeds will be utilised for the construction of a tertiary sewerage treatment plant (STP) in Ghaziabad in the Sahibabad industrial area of Ghaziabad to treat polluted water for recycling to industrial units.
The project, which is expected to cost Rs 240 crore and completed in 27-30 months, will be part funded by the proceeds of the green municipal bonds issue. The STP will reduce the dependence on groundwater, thus preserving water resources. The GMC will earn revenue by levying user charge.
In 2019, the UP government had decided to float municipal bonds in Lucknow and Ghaziabad to fund local infra projects. Later, SEBI accredited rating agencies were hired for securing the credit ratings. Brickworks and India Ratings had given AA rating to the issue.
Green bond refers to the issue of bonds by a government, non-government or corporate entities for raising funds towards projects aimed at ecological and environmental protection.
In November 2020, bonds worth Rs 200 crore of Lucknow Municipal Corporation (LMC) were oversubscribed by 250 per cent on its debut at the BSE. The municipal bonds floated by the LMC with 10 year tenure offered 8.5 per cent interest.
Now, Varanasi is also looking at floating municipal bonds in near future.
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