Mumbai : 21 June 2017
Pune is poised to add a new chapter in the country’s urban transformation saga based on Prime Minister’s vision of financially empowering urban local bodies. Pune will launch India’s largest Municipal Bonds program (INR 2264 Crores) at 0900 hrs on June 22nd , 2017 at Bombay Stock Exchange, Mumbai. This will also be the first issuance since the publication of ‘Issue and Listing of Debt Securities by Municipalities Regulations, 2015’ by Securities and Exchange Board of India (SEBI).
During the listing ceremony Union Minister for Urban Development,Housing and Urban Poverty Alleviation, Information and Broadcasting Shri. M. Venkaiah Naidu, Chief Minister of Maharashtra Shri. Devendra Fadnavis, Union Minister of State for Finance & Corporate Affairs Shri Arjun Meghwal and other dignitaries will be present.
Recognizing the fact that Municipal Bonds can be a useful tool to meet the city’s growing infrastructure-financing needs, Pune Municipal Corporation (PMC) has been proactively working with Government of Maharashtra (GoM), Union Ministry of Finance (MoF), Union Ministry of Urban Development (MoUD), SEBI, SBI Capital Markets Ltd. (SBI Caps) and advisors from the US Department of Treasury’s Office of Technical Assistance (OTA) in developing this new financial-asset-class. The Prime Minister, while inaugurating the National Institute of Securities Markets in Navi Mumbai on December 24th, 2016, urged SEBI and Department of Economic Affairs to ensure that at least 10 cities in India issue municipal bonds within one year in the context of the ‘Smart Cities Mission’. Additionally, the Union Government has proposed to give a compensation of 2% interest subsidy on the total size of the bond issue. Both these events have been pivotal in providing an impetus to PMC’s Municipal Bonds program.
PMC proposes to raise bonds amounting to INR 200 Crores during the first tranche of its 5-year bond program (INR 2264 Crores). PMC’s Standing Committee and General Body have approved a consumption based telescopic water tariff structure for the next 30 years. This policy will progressively increase the revenues generated from the ‘24x7 Water Project’ leading it towards self sustenance. Additionally, as a part of the structured escrow payment mechanism, a portion of PMC’s Property Tax has also been pledged for the debt servicing of the bond program. As per the financial-prudence prevailing at different points in time in the future while simultaneously adhering to the relevant regulatory framework, the bonds may also be partly/fully paid from PMC’s several revenue sources. On June 12th, 2017, Government of Maharashtra had given its approval for PMC’s bond program.