Ahmedabad Municipal Corporation To Raise $200 Mn Through Dollar Bonds
The Ahmedabad Municipal Corporation (AMC), which recently raised Rs 200 crore through municipal bonds, now plans to raise another $200 million through dollar bonds. This would make the AMC the first civic body in India to raise funds through dollar bonds. The AMC is also the first South-East Asian municipal body to raise funds through municipal bonds first in 1998.
The funds raised from the dollar bonds will be used to construct city’s infrastructure, better healthcare services and provide basic amenities. For this, the corporation has already tied up with International Financial Corporation, a World Bank-arm, that will help arrange international bond issues. “We have already tied up with IFC (International Finance Corporation), a World Bank arm, which will help us arrange the international bond issue. We will use the entire proceeds in building city infrastructure,” Commissioner of the AMC Vijay Nehra was quoted as saying in a report by The Economic Times.
The money will be raised in two tranches with a maturity time ranging between three and ten years. The corporation, which is aimed at going the corporate way rather than waiting for government aid, will also seek credit ratings for the proposed funding to strengthen its financial status. Recently, in January, credit rating company Crisil had upgraded the AMC’s creditworthiness from AA (Stable) to AA+ (structured obligation).
The corporation would start the sale process of these bonds after May.
What are dollar bonds?
Dollar bonds are the dollar-denominated bonds that are raised issued outside the United States of America (US) by US organisations or by overseas organisations within that country. These bonds open up a large pool of investors calling for wider participation, a faster raising of funds and higher funds than expected, too. Dollar is chosen for such bonds as the currency risk is very low and the yield high.