Yogi Adityanath, the Chief Minister of Uttar Pradesh, attended the Bell Ceremony at National Stock Exchange, Mumbai to witness the listing of bonds of Lucknow Muncipal Corporation (LMC) valued at INR 200 crore at Bombay Stock Exchange. Incentivized by the Ministry of Housing and Urban Affairs under Atal Mission for Rejuvenation and Urban Transfromation (AMRUT), the listing of bonds aims to subsidise LMC’s burden of interest and it will further help improve financials of the municipal corporation and make the city self-dependent in terms of its expanses to be incurred on the development of civic infrastructure. The initiative is aimed at boosting Aatma Nirbhar City under Atma Nirbhar Bharat scheme. With this, the maiden municipal bond issue launched by LMC is now tradeable on Bombay Stock Exchange.
The LMC issue successfully received bids of Rs 450 crore from 21 investors just after it was listed at the Bombay Stock Exchange. That the issue closed at coupon rate of 8.5% even in the times of COVID, reflects positive investors’ sentiment and their demand for quality municipal bonds. Moreover, it turned out to be a historic occasion as well, since it’s the first municipal bond issue from Uttar Pradesh and also first from any state of North India.
Significantly, the issue got over-subscribed while it followed the trend set by Ahmedabad Municipal Corporation (AMC) that had issued the first municipal bond valued at Rs 100 core that too without the guarantee of state government. Also valued at Rs 100 core, the AMC bond was issued in January 1998.
The initiative supported by the Government of India and the Government of Uttar Pradesh, not only marks a paradigm shift in urban government, but it will also trigger more transparent and market oriented local administration.
After LMC, the Uttar Pradesh government is also keen to encourage various other local bodies of the state to follow suit on the back of the example set by LMC. Now it is also expected that the the municipal corporations of other major cities of the state including Ghaziabad will also bring out their municipal bonds for their listing at stock exchange. India Ratings has rated ‘AA’ to the bond issue of LMC while the Brickwork Ratings has given it ‘AA (CE)’. The tenure of LMC bond is 10 years. The maiden bond issue also demonstrates the transformation of LMC into a model for urban governance in India.