Mumbai, Feb 14 (PTI) The Greater Hyderabad Municipal Corporation today raised Rs 200 crore by selling 10-year bonds, becoming the second civic body to tap funds from this route this financial year after its counterpart in Pune.

Proceeds from the issue, which was oversubscribed two times at a coupon of 8.9 per cent, would be used to fund a strategic road project in Hyderabad, that is estimated to cost at Rs 3,518 crore.

The municipality is planning to raise Rs 1,000 crore from bond sales in tranches. It will be financing Rs 1,000 crore for the project and raising the remainder from loans.

“Hyderabad is a city of 10 million with a 1,000 km road network. We need to improve the traffic junctions, make traffic hassle-free by reducing travelling time,” municipal commissioner B Janardhan Reddytold PTI over phone.

The bond issuance has been rated ‘AA’ (stable) by credit rating agencies and was oversubscribed by two times.

The issue was managed by SBI Caps, which was also the sole i-banker for the Rs 200-crore bond sale by the Pune Municipal Corporation (PMC) in June 2017.

SBI Caps president and chief operating officer Ashwani Bhatia said there is an overwhelming investor response for municipal bonds.

“Four more cities with high credit ratings are in the pipeline, which are expected to hit the markets over the next few months. They are expected to raise Rs 1,000 crore from these issuances,” Bhatia said.

The PMC had in June 2017 raised Rs 200 crore by selling 10-year bonds, becoming the first civic body to tap money through this route in 15 years. That issue was oversubscribed over six times or Rs 1,200 crore from 21 investors spanning across insurance companies, mutual funds, nationalised banks and long-only pension funds.

Till date the total amount raised in municipal bonds is Rs 1,095 crore.

This is published unedited from the PTI feed.