GHMC is planning to issue bonds for Mega projects

The cash-strapped Greater Hyderabad Municipal Corporation (GHMC) is planning to float a municipal bonds issue soon.The civic body has recently sent a proposal to the state government seeking approval to go ahead with the issue of municipal bonds worth `1,000 crore and also raise `2,500 crore through term loans from financial institutions, including banks.

“The state government is in the process of negotiating with financial consultants on the bonds issue and term loans. This will be finalized soon,“ municipal administration and urban development department secretary Navin Mittal told.

If the bond issue goes through, GHMC will join the likes of Ahmedabad Municipal Corporation, which was the first civic body to opt for municipal bonds in 1998 and Pune Municipal Corporation (PMC), which raised `200 crore via municipal bonds on Monday .

According to official sources, though permission is being sought from the state government for raising `1,000 crore via bonds, the civic body may raise only `250 crore initially and raise the rest later in installments. The bonds will be issued for a period of 10 years, while



the term loans will be for 20 years, official sources added.

Before initiating this process, GHMC had its financial rating assessed by two agencies-ICRA and CARE. Initially , ICRA had given an A rating (low credit risk) and CARE gave an AA rating (very low credit risk) based on the civic body's financial capability , properti es and other issues.Though SBI Capital, Yes Bank, ICICI Bank, Axis Bank, AK Capital Services, ICRA are among those in the race to manage the bonds issue, SBI Caps is learnt to be the leading contender.

The fund-starved GHMC, which has been making efforts to raise finances through bonds and term loans for the past one year, needs the funds for taking up various schemes and projects such as the state government's flagship programme -two-bed room housing scheme, the Strategic Road Development Project (SRDP) and other infrastructure projects.

“The amount will be utilized for SRDP, 2BHK housing and left over works for housing programme under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM),“ GHMC additional commissioner (finance) Jayaraj Kennedy told.