Exclusive | UP’s two municipal corporations plan bond issue: Sources

Municipal corporations issue bonds to raise funds from individuals and institutions.

Two municipal corporations in Uttar Pradesh -- Prayagraj Municipal Corporation and Kanpur Municipal Corporation --are planning to issue their first municipal bonds, and have invited bids for transaction advisor-cum-merchant bankers, sources said.

Kanpur Municipal Corporation officials told Moneycontrol on condition of anonymity that they are planning to raise at least Rs 100 crore through a 10-year municipal bond issue.

While Prayagraj Municipal Corporation officials confirmed the bond issue, they declined to disclose the amount planned to be raised, saying it was still too early.

Municipal bonds are similar to corporate bonds. The only difference is that the former is issued by civic bodies to finance urban infrastructure projects.

Municipal corporations issue bonds to raise funds from individuals and institutions. Investors are promised a specified interest and return of the principal amount on the maturity date.

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Kanpur Municipal Corp’s plan

Officials from Kanpur Municipal Corporation said these funds are expected to be utilised for the construction of office-cum-commercial space, the development of BP Shrivastava market for women, and the AMRUT scheme.

The corporation has invited applications from merchant bankers, for which the deadline is 3:30 pm on April 11.

“We may extend the last date for bidding by one week to get requests from more merchant bankers and assess their interests,” an official said.

Before this, the corporation had held pre-bid meetings with prospective merchant bankers. At the meeting, a decision was taken to extend the deadline for submitting applications, the officials added.

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Request for proposal

Documents on the request for proposal (RFP) showed that applications invited by these corporations are for the selection of transaction advisor-cum- merchant bankers for technical assistance, due diligence and fund mobilisation for municipal corporations through municipal bonds.

The tender of Prayagraj Municipal Corporation showed that the deadline for the selection of merchant bankers is 3 pm on April 12.