Bangalore Metro Rail Corporation Ltd. (BMRCL), armed with ‘IND AA’ rating, is all set to raise Rs. 500 crore from the domestic market by issuing bonds — non-tax-free and non-convertible debentures.

A BMRCL press release on Thursday said when the corporation issues these bonds through private placement, probably by the end of this month, it would be the first “Metro Bond” issue in the country and hoped that other metro corporations would follow suit.

The corporation expects to bring down the cost of debt capital through the issue of these bonds by taking advantage of the prevailing yields in the bond market.

The IND AA rating comes as a boost since the corporation is a joint venture of the Government of India and the Government of Karnataka. The rating also derives strength from the shadow cash support from the State government to service senior debt to avoid a default. BMRCL is planning for the secured bond issue through private placement route.

A senior BMRCL official told The Hindu that the rating is very good, next only to the Government of India’s rating. The corporation expects investments at market-driven rates, lower than lending rates of commercial banks.

Through this issue of the 10-year bonds, BMRCL expects to repay certain costly loans and reduce its burden, the official said. While SBI Capital is the adviser for the bond issue, the corporation is still finalising the modalities of the issue.

The official said obtaining credit rating for the corporation had been a tedious process and it took almost three months for the process to be completed. The issue of bonds is prestigious for BMRCL and it would enhance the corporation’s standing in the market, the official said.

For the Rs. 11,609-crore Namma Metro Phase 1, BMRCL has been given a 54,536 yen loan by Japan International Cooperation Agency and a 110 million euro loan by Agence Française de Développement.