Pune Municipal Corporation – Successfully created a Structure for Municipal Bond issuance 

1. PMC, rated AA+, became the first civic body to issue the Municipal Bond in 14 years
2. Being the first municipal bond issuance after 14 years, there was no template for issuance of municipal bonds. It was further complicated by negative perception of municipal bonds in the minds of investors that the municipal corporation may not have the willingness to honor its debt obligation. This means that SBICAPS had to design a unique structure to address investor concerns as well as give flexibility to issuer in financing. 
3. PMC had borrowing program of total Rs. 2264 crores for the 24X7 Water Supply project for Pune during the 5-year project period. Incidentally, the bond program of PMC was higher than the total amount raised through Municipal Bond in the country till date
4. On the investor side, there was concern on the ability of the Municipal Corporation to repay its obligations and observe financial discipline. 
5. Considering the feedback, SBICAPS devised an escrow account with preference to debt holders and separate debt servicing accounts to address investor concerns on ability to pay interest and principal. To ensure that the corporation observe financial discipline, certain covenants as to max borrowing that Municipal Corporation can take was stipulated such that it gives flexibility to Municipal Corporation to leverage it cashflow for future projects but at the same time ensures that the additional borrowing is managed in a manner that does not put pressure on PMC financials as well as escrow structure.
6. An investor meet was organised by us to explain the structure in detail to the investors and address that concern.
7. We closely coordinated with SEBI and were successful in obtaining various regulatory relaxations unique to Municipal Corporation to enable them to issue bonds. 
8. In the first tranche PMC raised Rs. 200 crore by selling 10-year bonds, the bond program received bids for more than 5 times i.e. 1185 crore rupees against bond issue of Rs. 200 crs. with 21 bids. Incidentally so far there have been issuances of little over Rs 13.50 Bn by municipal correlation.
9. The PMC Municipal Bonds are listed on the BSE and the Listing ceremony of these bonds were held in BSE in the presence of – Shri Venkaiah Naidu, Hon’ble Minister for Urban Development-Government of India, Shri Devendra Fadnavis, Hon’ble Chief Minister of Maharashtra, , Smt Arundhati Bhattacharya Chairman of the State Bank of India and other dignitaries from State Govt. and Pune Municipal Corporation.