Hyderabad Muni-bonds

Greater Hyderabad Municipal Corporation has raised ₹200 crore by selling munibonds, aimed at supporting the government’s much coveted “smart city” project.

This is the second such bond sale in recent months after the Pune local body in June last year. Insurers, pension funds and banks have invested in the debt securities that earn 8.90% semi-annual interest rate with 10-year maturity.

“We will use the proceeds to strength our road projects,” said B. Janardhan Reddy, Commissioner of Greater Hyderabad Municipal Corporation. “Such form of fund raising will also help improve financial health as you are directly liable to investors.” Greater Hyderabad has a road network of more than 9,000 km. The local body is now busy widening the roads and building flyovers, underpasses and lane expansions. The issue, handled by SBI Capital Market, was oversubscribed more than two times, having received subscriptions of more than Rs.400 crore. Rating companies have graded it as AA, a notch lower than Pune Municipal Corporation bonds, rated AA+.

The rate offered is about 74 basis points and 134 basis points higher, respectively, than the Telengana and Andher Pradesh state bonds, going by the latest RBI auction of state development loans, a platform where state governments raise money by selling bonds.

“We are working with two more top cities whose municipal bonds are likely to hit the market within a few months,” said Ashiwani Bhati, COO, SBI Capital Market. “People are now looking for good quality and higher yields amid good liquidity.”

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