Ahmedabad Municipal Corporation’s ₹200-crore five-year bond issue was fully subscribed in two minutes flat on Friday on NSE’s electronic debt bidding platform.
The issue, which had a basic size of ₹100 crore (with an option to retain ₹100 crore oversubscription), received subscriptions aggregating ₹1,085 crore within an hour of opening at 11 am, according to Vijay Nehra, Commissioner, Ahmedabad Municipal Corporation. The Corporation has tapped the debt market after a gap of 14 years.
“The bonds are issued as taxable, listed, unsecured, non-convertible debentures... The coupon is likely to be announced after the pay-in happens on January 15. The bonds have been subscribed through electronic competitive book-building process. Investors have put in their bids along with the amount they want to subscribe and the interest rate they want,” explained Nehra.
The Corporation is going to use the proceeds from the current issue for taking up development projects under the Government of India’s AMRUT (Atal Mission for Rejuvenation and Urban Transformation) scheme.
SBI Capital Markets was the sole advisor and arranger to the AMC’s bond offering.
“Under this scheme, the Central and State governments contribute 33 per cent and 20 per cent of the development funds, respectively, and we, as a third level of government, bring in the balance.
“The ₹200 crore that we raised will help us get another ₹250 crore from the Central and State governments. So, projects worth ₹450 crore will be taken up in the next 12-18 months,” said Nehra.