India’s first Rs 150 crore Ghaziabad ‘Green Bond’ lists on the BSE Bond Platform

The Ghaziabad Municipal Corporation which raised 150 crore (Base issue: Rs 100 crore with the greenshoe option of Rs 50 crore) via municipal bonds on a private placement basis using the BSE bond platform, got listed on the exchange on April 8. It was opened for a subscription on March 31, 2021.

The coupon rate of the taxable bond was fixed at 8.1% per annum and were rated AA by India Ratings and AA(CE) by Brickworks and has a maturity of 10 years with a staggered redemption. Additionally, the company received Rs 19.5 crore incentive from the government of India for raising municipal bonds.

The Ghaziabad Municipal Corporation (GMC) has entered into an understanding with Sahibabad Industries Association for the purpose of achieving various goals and objectives relating to water supply. The capital raised is proposed to partially fund the tertiary sewage and water treatment plant, which is estimated to cost approximately Rs 239.93 crore. The merchant bankers to the bond issue were AK Capital Services and HDFC Bank.

Speaking on the occasion, Mahender Singh Tawar, Municipal Commissioner, Ghaziabad Municipal Corporation said: “This is a momentous occasion for us. The capital raised will not only enforce financial discipline but also paves way for the corporation for a bigger fundraise, if needed, in the future. We saw interest of 40 bids attracting a total subscription of Rs 401 crore. This had come within minutes on bid date and that too with a very competitive coupon rate of 8.10%, which is one of lowest in Municipal Bonds in India. This is also the first-ever green bond issued by any municipal corporation in India”.

Ashishkumar Chauhan, MD & CEO of BSE stated: “The order book was filled more than 4x in a matter of few minutes. The green bond market has immense potential and is an attractive opportunity for Indian municipalities to leverage funds for meeting clean and climate-resilient urban infrastructure targets for the nation”.

AK Mittal, MD & CEO, AK. Capital pointed out that India’s first green Municipal bond of Rs 150 crore is at historically low rates in the Municipal bond space. GMC bonds are backed by strong structured payment mechanism making it a AA group ratings instrument, hence a good and secured investment with an attractive return for the investors.”