Khaitan & Co advises on Maharashtra’s First Green Municipal Bond raising ₹200 Crore

Khaitan & Co advised the Pimpri Chinchwad Municipal Corporation (PCMC) on the private placement of up to 10,000 secured, rated, listed, taxable, redeemable, non-convertible green bonds, structured as debentures with a face value of ₹2 lakh each.

The transaction team consisted of Soumya Mohapatra (Partner), Riya Bhattacharjee (Partner), Surbhi Narang (Principal Associate), Nikunj Mehta (Senior Associate), Ananya Bharadwaja (Associate), Gyana Pathak (Associate), Mishi Malhotra (Associate) and Rishabh Kumar (Associate).

Each bond comprised two separately transferable and redeemable principal parts (STRPPs): one STRPP A of ₹1 lakh and one STRPP B of ₹1 lakh. The base issue was ₹100 crore, with a green shoe option of an additional ₹100 crore, aggregating to a total issue size of up to ₹200 crore (Green Bonds).

The Green Bonds have been rated AAA+ by CRISIL Ratings Limited and CARE Ratings Limited and have been issued at a coupon rate of 7.85%. The issuance was oversubscribed by 5.13 times and received bids worth INR 513 crores on the electronic bidding platform of BSE Limited. The structured repayment mechanism of the Green Bonds is secured through an escrow of Property Tax collections, ensuring timely servicing of interest and principal payments.

The issuance carried a 7.85% interest rate and five-year tenure, and was oversubscribed 5.13 times, with the ₹100 crore base issue subscribed within a minute of opening. PCMC holds a 'AA+ Stable' rating from both CRISIL and CARE, and the bonds are secured through an escrow of property tax collections.

Proceeds from the green bond will fund two eco-friendly infrastructure projects: the Harit Setu project in Nigdi Pradhikaran, aimed at improving first- and last-mile connectivity through non-motorised transport infrastructure; and the redevelopment of Telco Road to promote sustainable urban mobility.

This issuance also qualifies PCMC for an additional ₹20 crore central government grant, as over 50% of the funds were raised through green bonds. The move positions PCMC as a leader in municipal-level green finance in India and sets a model for other civic bodies exploring climate-resilient urban development.

This was Maharashtra’s first green municipal bond issuance, with its proceeds being utilised for funding the green infrastructure projects.

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