Kochi Corporation to issue municipal bonds worth ₹150 crore for infrastructure projects

The Kochi Corporation will invite Expressions of Interest from consultants later this month to help issue municipal bonds for major development projects, with officials weighing a phased approach that could eventually tap the civic body's ₹500-crore bond eligibility.

The Corporation held discussions with two agencies on Thursday and has been consulting the Securities and Exchange Board of India as a prelude to the bond issue process. "Initially, we are exploring the prospects of issuing municipal bonds worth ₹150 crore to finance development and infrastructure projects, along with green bonds worth another ₹150 crore to support environment-friendly and climate change mitigation initiatives," said Mayor V.K. Minimol. The proposal to invite EoIs will be included in the agenda for approval in the next council meeting.

Groundwork to boost credit rating

The Corporation has initiated steps to boost its credit rating ahead of the bond issue, beginning with streamlining its asset register and maximising revenue from all potential sources. Municipal bonds were identified as a preferred funding mechanism during the tenure of the previous Left Democratic Front council.

M. Anilkumar, former Mayor and co-chairperson of the Kerala Urban Policy Commission constituted by the LDF government, noted that initial steps such as incorporating municipal bonds into the State government's urban policy were taken during the previous administration, thereby providing political clarity on the matter.

"Credit rating is critical in issuing bonds, and the previous LDF council had taken steps to set its financial statements in order and implement a degree of financial discipline through measures such as regulating expenditure, reducing dues to contractors, and eliminating the concept of general funds," he said. Consultations with organisations of chartered accountants led to the realisation that an experienced professional agency was required to assist in the process.

Dedicated team needed

It was further identified that issuing municipal bonds necessitated the appointment of a dedicated team, for which new posts had to be created. Anilkumar cautioned against rushing into the process without identifying attractive projects, stressing that funds raised through bonds could not be used for day-to-day expenses.

V.A. Sreejith, LDF parliamentary party leader, said that while the Opposition was not against the concept, concerns remained about who would preside over the process. "Our stand is that a team of Corporation officials led by the secretary should oversee the entire process to safeguard the interests of the Corporation," he said.

Source: The Hindu