In a first, Chennai Corporation to issue municipal bonds to fund public projects
The GCC passed a resolution in its council meeting on April 30, allowing the local body to issue municipal bonds to raise funds for the integrated stormwater drain project
Greater Chennai Corporation (File Image)
CHENNAI: For the first time in the history of the Greater Chennai Corporation, bonds will be issued to raise funds for public projects and the local body is all set to issue bonds to the tune of Rs 200 crore for the integrated stormwater drain project in the Kosasthalaiyar basin.
The GCC passed a resolution in its council meeting on April 30, allowing the local body to issue municipal bonds to raise funds for the integrated stormwater drain project. GCC said it is in the process of issuing rated, listed, taxable, unsecured, redeemable, non-convertible municipal bonds for an amount aggregating up to Rs 200 crore under SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015. It also pointed out that the Municipal Administration and Water Supply Department had granted administrative sanction to the GCC for raising municipal bonds up to Rs 200 crore.
An official from the GCC Finance Department, requesting anonymity, told DT Next that they have already sent all the papers related to list the bonds to SEBI for its approval and they expect the approval to be given in two or three days and it will be listed for the public within a month, he said.
The minimum price for a bond will be Rs 5 lakh each and the tenure of a bond is 10 years, said the official. The principal amount will be repaid in six years and every half yearly interest will be disbursed to the bond holders, he added.
A credit enhancement facility is available under the World Bank supported Tamil Nadu Climate Resilient Urban Development Programme; these funds are designed to improve the credit rating of the bonds proposed for mobilisation by urban local bodies for water system projects, including water supply, sanitation, and stormwater drainage, said the GCC.
FILLING THE COFFERS
The GCC is set to issue rated, listed, taxable, unsecured, redeemable, non-convertible municipal bonds worth Rs 200 crore to raise funds for an integrated stormwater drain project
The minimum price for a bond will be Rs 5 lakh each and the tenure of a bond is 10 years; The principal amount will be repaid in six years; every half yearly interest will be disbursed to bond holders
