Earlier, November this year, LMC received 21 bids on BSE Bond platform for Rs 450 crore. Picture courtesy: ANI
The 200-crore Lucknow Municipal Corporation (LMC) bonds were listed on Bombay Stock Exchange (BSE) today. Uttar Pradesh Chief Minister Yogi Adityanath attended the bell ceremony. With today’s listing, Lucknow has become the first city in north India and ninth city in India to have raised funds by issuing municipal bonds. Last month, LMC had raised Rs 200 crore by issuing municipal bonds on a private placement basis using the BSE Bond platform. Earlier, November this year, LMC received 21 bids on BSE Bond platform for Rs 450 crore, which is 4.5 times of the total issue size of Rs 100 crore, a statement said.
Municipal bonds to fetch 8.5% interest
The municipal bonds offer 8.5 per cent interest per annum and have tenure of 10 years. The proceeds of the issue are proposed to be invested in a water supply project being implemented under AMRUT (Atal Mission for Rejuvenation and Urban Transformation) scheme of the government and a housing project. This bond issue from Lucknow Municipal Corporation is rated ‘AA’ by India Ratings and ‘AA (CE)’ by Brickwork Ratings.
According to the Ministry of Housing and Urban Affairs, it is structured as a ‘strip’ bond with 7 STRRPs (A to G) and principal repayment to happen in 7 equal annual payments from the 4th year to the 10th year. In addition to asset cover, a structured payment mechanism has been put in place to ensure timely payment of both principal and interest obligations.
LMC to help achieve ‘Atmanirbhar Bharat’ goal
Uttar Pradesh Chief Minister Yogi Adityanath said “In COVID times, Lucknow Municipal Corporation will progress towards achieving the ‘Atmanirbhar’ goal with the listing of municipal bonds worth Rs 200 crores. The Corporation is committed to improving the lives of the citizens living in its jurisdiction: UP CM Yogi Adityanath”. The Housing and Urban Affairs Ministry added that in the coming months, the municipal corporations of Ghaziabad and then other cities such as Varanasi, Agra and Kanpur will also issue municipal bonds, followed by a pooled municipal bond issue from some of the smaller municipal entities in the state.
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