MMRDA to issue bonds worth ₹14,000 crore to fund major infrastructure projects in Mumbai

Mumbai, India (Urban Transport News): Mumbai Metropolitan Region Development Authority (MMRDA) is seeking a state government guarantee to issue bonds valued at Rs 14,000 crore to fund infrastructure and development projects. The initial issuance will consist of bonds worth Rs 1,400 crore, with the remaining amount to be raised based on the success of this first tranche. In July, MMRDA received approval to raise ₹50,000 crore through bonds for infrastructure development in Mumbai and its surroundings.

These bonds are structured as secured, rated, redeemable, and taxable non-convertible debentures (NCDs). They will be backed by an unconditional and irrevocable guarantee from the state government. MMRDA's previous funding approach involved auctioning plots in the Bandra-Kurla Complex (BKC) to developers for commercial purposes. With few plots left in BKC, MMRDA is now issuing bonds to secure funding.

The funds from these bonds will be used primarily for improving mobility, housing, and essential services in the densely populated Mumbai Metropolitan Region (MMR). The bonds will be issued on a partly paid-up basis and listed on stock exchanges following regulatory requirements. Each bond, tentatively priced at Rs 1 lakh, will be secured by mortgages on specific MMRDA-owned land parcels. Current valuations of these land assets provide more than double the security needed for the bonds, bolstering investor confidence. The state government guarantee further assures bondholders regarding principal and interest payments.

MMRDA plans to create an interest service reserve account (ISRA) to manage interest payments and maintain liquidity for unforeseen circumstances, especially related to land asset monetization. The proposed debentures have a long tenure of 50 years, with a call option allowing MMRDA to redeem the bonds at par after 15 years, and annual redemption options thereafter. This strategy of combining asset backing with government support could serve as a model for infrastructure financing for other regional bodies in India.

Success in this bond issuance could open new funding channels for large-scale public projects through capital markets, potentially transforming how public infrastructure is financed in India. Although MMRDA does not currently have tax revenue generation powers, it plans to fund projects through land deals and asset monetization, including from the Metro network. The Rs 60,000 crore loan limit and bond funds will act as a financial buffer against any delays in project revenue inflows.