KOCHI: Kochi Corporation is planning to raise around Rs500 crore through municipal bonds by November-December to part-finance a Rs1,000 crore programme to develop commercial and residential properties on corporation-owned land, in what could become Kerala's first municipal bond issue.
The civic body plans to invest in rental-yielding commercial complexes and residential buildings, with the income generated expected to support debt servicing.
The Corporation has already floated tenders to appoint a consultant to structure the bond issue and will subsequently undertake a credit rating exercise before approaching the market.
"We are planning to invest the funds in revenue-generating assets. Since the projects themselves are expected to generate cash flows, the bond issue may not require any outside guarantee," Kochi Mayor Adv. VK Minimol told businessbenchmark.news.
The mayor said the project details are being finalised and would require the approval of the Corporation Council before the proposal is taken forward.
Urban Challenge Fund
The financing plan envisages about 20 per cent of the project cost from the Corporation's own resources, 25 per cent as a grant under the Centre's Urban Challenge Fund and the balance through municipal bonds.
However, the Corporation will also evaluate whether raising funds through bank loans would be more economical before taking a final call. "If municipal bonds prove to be the more efficient funding route, that will be our preferred option," the mayor said.
The proposed bond issue would place Kochi among a select group of Indian cities that have tapped the debt market for infrastructure financing. Municipal corporations including Ahmedabad, Pune, Hyderabad, Indore, Bhopal, Lucknow, Surat, Nashik, Vadodara and Pimpri-Chinchwad have raised funds through municipal bonds over the years.
The Centre's recently launched Urban Challenge Fund is designed to encourage cities to leverage market borrowings for urban infrastructure. Under the scheme, the Central government provides up to 25 per cent of the project cost as a grant, while cities are expected to mobilise a substantial portion of the funding through market borrowings or other external sources.
If successful, Kochi's proposed Rs500-crore issue would rank among the largest municipal bond issuances by an Indian municipal corporation and mark a milestone in Kerala's urban financing landscape.
