Ahmedabad Municipal Corporation gets AA

Crisil has assigned AA (so) (double A structured obligation) rating to the Rs. 100 crore bond programme of Ahmedabad Municipal Corporation (AMC), indicating high degree of certainty regarding timely payment of financial obligations on the instrument. The rating reflects the strength of the credit enhancement mechanism consisting of an escrow account for collating property tax revenues from pre-specified zones which would be deployed towards debt servicing requirements. The trustee would monitor the collation of funds and payments to the bond holders.

The rating also factors in AMC's consistent revenue surplus position since 1994-95, the present comfortable debt service coverage ratio (DSCR), relatively high per capita expenditure on core services, diversified economic base and adequate economic infrastructure. The rating is however constrained by the impact of pay revisions to municipal employees and rising debt servicing expenditure.

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Section  : Business
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