Ahmedabad Civic Body To Float Rs 100 Crore Bonds

The Ahmedabad Municipal Corporation is planning to float Rs 100 crore worth of tax-free bonds before March 31, 2002, to fund infrastructure projects in the city.

Each bond of Rs 1,000 face value would be for a 10-year period and the rate of interest would be 9.09 per cent.

A corporation source said that all the necessary approvals from the requisite authorities, including the state and Central governments, have already been obtained.

"The other essential formalities for the issue of the bonds is now being initiated on a war-footing as we want to float the bonds during the current financial year itself," he added.

According to him, the corporation plans to target only a select group of prospective investors especially large financial institutions and corporates. Therefore the corporation would not be issuing any public notice or advertisements to market the bonds. Instead the plan is to sell the bonds by 'word of mouth'.

The tax-free bonds are expected to evoke a good response. It is learnt that each subscriber may be required to subscribe for a minimum of Rs 1 lakh worth of bonds.

Funds mobilised through the bond issue would be utilised for sprucing up the infrastructure projects of the city -- specifically to build bridges, fly-overs, roads as well as water and drainage lines.

In 1997, the Ahmedabad Municipal Corporation became the first municipal corporation in entire south Asia to have gone for a credit rating and then come out with the first-ever retail offering of municipal bonds in January 1998.