Vadodara Municipal Bond’s Successful Listing – A Case Study for US Treasury

The book titled ‘All About Municipal Bond’ includes Vadodara Municipal Corporation’s successful listing of municipal bond as a case study.

About the Vadodara Municipal Bond

  • Vadodara Municipal bond was listed at the Bombay Stock Exchange (BSE) on March 23.
  • With this, Gujarat’s Vadodara became the second Indian city to issue a municipal bond with assistance from the US Treasury Department’s Office of Technical Assistance. The first city to avail the US Treasury Department’s services was Pune in 2017.
  • The Vadodara Municipal Bond received overwhelming response from investors. The bond issue was oversubscribed by around 10 times of the issue size with a total bids worth Rs.1,007 crore from 33 interested investors.
  • It was priced at a low yield of 7.15 per cent. This makes it the cheapest fund raised by the civic body till date.
  • The India Ratings and Research had accorded the bond A+/stable rating.
  • Since the civic body was able to raise funds before March 31, 2022, it qualified for the Central Government’s incentive of Rs.13 crore.

How does the Vadodara Municipal Bond help the civic body?

  • The proceeds raised from the bond issue will be used for funding 14 projects under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme.
  • They will be used for water supply projects and infrastructure projects, strengthening the self-reliance of the civic body significantly.
  • The funds raised from these bonds have been used for Sindhrot Water Supply Project, which provides for the drinking water needs of the city and the Liquid Waste Management Project, which will help in the effective disposal of sewage water.

‘All About Municipal Bond’ book released

The book titled “All About Municipal Bond” was released in New Delhi recently. It is a compilation of the process of issuing the municipal bond. Vadodara Municipal Bond’s case study is a part of the book. The case study was jointly put together by the VMC and the US Treasury. The Vadodara Municipal Bond was chosen by the US Embassy and Treasury for a case study on successful listing and a benchmark for other civic bodies looking to issue municipal bonds.

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