With sustainable development getting a much-needed push in the Union Budget 2023-24, Indore Municipal Corporation has announced a public issue of green bonds in four separate, transferable, and redeemable principal parts (STRPP) from February 10 to 14, 2023.
The corporation has filed an offer document for the public issue of “rated, listed, taxable, secured, redeemable, non-convertible green municipal bonds,” with a face value of Rs 1000 each.
Each bond comprises four STRPPs: “1 STRPP A with a face value of Rs 250, 1 STRPP B with a face value of Rs 250, 1 STRPP C valued at Rs 250, and 1 STRPP D worth Rs 250.
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These bonds will offer 8.25 per cent, payable half-yearly, with an effective yield of 8.42 per cent. The bonds have a tenor of three years (STRPP A), five years (STRPP B), seven years (STRPP C), and nine years (STRPP D). According to a corporation official, “the effective yield for the three, five, and seven years bonds is 8.41 percent, whereas, on the nine years, it is just one basis point (bps) up at 8.42 per cent.”
Its notification further states that the bonds come “with a base issue size of Rs 122 crore, with an option to retain oversubscription up to Rs 122 crores aggregating up to Rs 244.”
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The non-convertible debentures (NCDs) are to be listed on the National Stock Exchange of India Limited (NSE). The bonds have been “assigned a rating of ‘CARE AA: Stable’ by CARE Ratings Limited and ‘IND AA+/Stable’ by India Ratings and Research Private Limited.”
“Effective yield (per annum) for NCD holders in category I (QIB), category II (Corporate), category III (HNI), and category IV (retail individual) for tenor three years, five years, and seven years is 8.41 per cent, and for STRPP D, with a nine-year tenor, is 8.42 per cent,” as per the release.
Additionally, it said the interest payments would be through various modes, including direct credit, national automated clearing house (NACH), real-time gross settlement (RTGS), national electronic funds transfer (NEFT), and registered post and speed post.
The net proceeds from the issue will be used to install a 60 MW solar PV power plant in Madhya Pradesh’s Samraj and Ashukhedi villages of Khargone district.
The bond issuance comes in the backdrop of a much-needed push in the Union Budget 2023 for sustainable development, making it one of the government’s seven priorities in the last full budget before the next general elections.
Budget 2023-24 announced several important measures for the energy-intensive sectors, such as agriculture, transportation, housing and infrastructure, and manufacturing. Investments earmarked for energy transition or net zero initiatives have been given the largest allocation of Rs 35,000 crore, and the hydrogen mission, a path-breaking policy initiative, received Rs 19,700 crore for the production of five million metric tonnes of green hydrogen by 2030.
