The issue garnered bids worth 7 billion rupees ($84.7 million), as against the total size of 2.44 billion rupees, data showed. The issue opened for subscription on Friday and will close on Tuesday even as it was oversubscribed as the regulatory mandate requires a public issue to stay open for a minimum of three working days, one of the bankers said.
The institutional investor category saw the biggest demand after being subscribed 3.76 times, while the retail segment saw investors bidding for 2.70 times the alloted quantum. The higher demand from institutional investors was on expected lines after the corporation did road shows and outreach programmes, said Divyank Singh, chief executive officer of Indore Smart City.
However, retail participation came as "a surprise," the civic body official said. Retail investors will get allotment proportionate to their subscriptions. Over 7,600 retail investors applied for the issue, according to Vishal Goenka, co-founder of online retail bond investment portal IndiaBonds. Indore Municipal Corporation will use the issue to fund a solar power plant in the state of Madhya Pradesh, according to a term sheet issued last week. The civic body, which oversees development in the city of Indore, is raising funds through separately transferable redeemable principal parts bonds (STRPPs), maturing in three, five, seven, and nine years, and will offer a coupon of 8.25%, payable semi-annually. The bonds are rated AA+ by India Ratings and AA by CARE Ratings. Market participants expect more civic bodies to tap bond offerings in the coming days.
Earlier this month, the Indian government said it will incentivise urban civic bodies to improve their finances and creditworthiness and help them raise funds through municipal bonds. ($1 = 82.6640 Indian rupees) (Reporting by Bhakti Tambe; Editing by Dhanya Ann Thoppil)
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