US treasury department releases book on Vadodara municipal bond listing at BSE


Celebrating the successful Bombay Stock Exchange (BSE) listing of the municipal bond issued by the Vadodara Municipal Corporation (VMC) in March, officials of the US embassy and the treasury department on Thursday launched a book titled All About Municipal Bond, which takes it as a case study and a benchmark for other civic bodies eyeing the stock exchange.

The corporation in Gujarat, which listed a five-year Rs100-crore bond at the stock exchange on March 23 for 14 projects under the Amrut scheme, had received 36 bids on the BSE BOND platform for Rs 1,007 crore, 10 times the issue size. The success of the listing enabled the corporation to become eligible for a Rs 13-crore incentive from the central government.

Former municipal commissioner Shalini Agarwal, under whose leadership the bond was issued, mayor Keyur Rokadia and the corporation’s accounts officials were present at the event in New Delhi where the US embassy and US treasury department officials launched the published case study.

Corporation officials said the book, for which Agarwal has written the preface, would provide “lessons to other municipal bodies” for issuing municipal bonds. Chief accountant Santosh Tiwari told The Indian Express, “The book is a compilation of the process of issuing the bond. It is a case study that has been jointly put together by the VMC, under the guidance of our former commissioner Shalini Agarwal, and the US treasury, which was our advisor in the process. The VMC’s bond has been chosen as a case study as it has been the most successful municipal bond in the country with the highest subscription and a low yield price. The case study has been released globally by the US treasury under its brand name.”

The corporation has deployed the raised funds in the Sindhrot Water Supply Project as well as the Liquid Waste Management Project. It had also been selected to receive free technical assistance and guidance from the advisers of the US treasury department. Vadodara is the second municipal corporation, after the Pune municipal corporation, to avail of the treasury department’s services. Advisers of the department and the Ministry of Housing & Urban Affairs provided full support during each stage of the bond issuance.

A release from the US consulate said, “The US Embassy and US Treasury officials joined counterparts today from India’s Ministry of Housing and Urban Development, the city of Vadodara, and the Securities and Exchange Board to celebrate the successful issuance of Vadodara’s first-ever municipal bond. The bond will provide funds for infrastructure in Vadodara. A written case study will also be published sharing lessons learned from Vadodara’s bond issuance that will benefit other Indian cities issuing their own municipal bonds in the future.”

In opening remarks, chargé d’ affaires Patricia Lacina said, “Municipal finance can help to pay for the vital capital projects–roads, energy, water, sanitation and other essentials– that make a meaningful difference in the quality of life for many people. Municipal finance also represents a form of empowerment. As cities start to finance their own projects, municipal officials are called upon to be good financial stewards, who make the best possible use of funding to achieve the best possible results for those they represent. I am excited about the example this project sets and the possibilities it provides for the people of Vadodara. We welcome other Indian cities following suit and issuing their own municipal bonds in the future.”

The corporation had received the subscription amount of Rs 100 crore at a yield of 7.15 per cent. “By far this stands as the most competitive and lowest rate amongst municipal bond issuances in India. Further, it also made the VMC eligible for an incentive of Rs 13 crore from the central government as it has been successful in raising money through bonds before March 31, 2022. Therefore, the effective coupon rate will be Rs 4.55 per cent per year to make a total of 22.75 per cent for a period of five years,” said Tiwari, the corporation’s chief accountant.





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