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Pune raises Rs 200 crore in first municipal bond issue in 14 years

By PN Team Posted on Jun, 19 2017

Pune Municipal Corporation (PMC) has become the first local body in the country to issue municipal bonds in nearly one and a half decade, raising Rs 200 crore for the smart city project, the central government’s pet scheme. 

 

The issue, handled by SBI Capital Market, was oversubscribed six times, having received subscribtions worth Rs 1,200 crore. The bonds, rated AA+, one of the top ratings, offers 7.59%, about 30-40 basis points more than bonds sold by state governments. 

Domestic insurers, pension funds, and large state-owned banks invested the PMC bonds. 

PMC proposes to increase water tax to raise revenue. 

For the bond-sale, the municipal body even consulted the treasury department in the US, where such bonds, known as “muni bonds”, have a strong market.