­Hyderabad Metropolitan Development Authority (HMDA) was established with the primary objective of planning, coordinating, supervising, promoting, and securing the orderly development of the Hyderabad Metropolitan Region. Formed under an official government order (G.O.Ms.No.570 MA & UD (II) Dept.) on August 25, 2008.. Spanning an extensive area of 7,257 square kilometers, HMDA's jurisdiction encompasses seven districts and 70 mandals. Within this vast region, there are a total of 1,032 villages, including those within the Greater Hyderabad Municipal Corporation (GHMC), which is composed of 175 villages and 40 municipalities, including Nagar Panchayats. Specifically, HMDA is responsible for an additional 138 villages, while the remaining 719 villages also fall under its jurisdiction. This comprehensive coverage allows HMDA to undertake integrated planning and development initiatives aimed at enhancing the quality of life for residents and promoting sustainable growth in the metropolitan region. Hyderabad Urban Development Authority (HUDA) - Established in 1975 and transformed into HMDA. Mr. Anumula Revanth Reddy, Ms. Gadwal Vijayalakshmi, Mr. K. Ramakrishna Rao are the members.

­Acuite AA-/Stable (factoring in government support)

­Acuite has considered standalone approach while evaluating the financial and business risk profile of HMDA and further notched up for the support of Government of Telangana and structured payment mechanism in place for the issue for arriving at the rating.

• The issuer is required to fund the Bond Service Account (BSA) with the full quarterly servicing amount least 45 days prior to the repayment date (T-45). 
• The Debenture Trustee will verify the adequacy of the DSRA at the beginning of each servicing cycle. In case of BSA does not have the required amount by T-5, the shortfall will be met by transferring funds from DSRA to ensure timely servicing of interest and principal. 
• If the DSRA is utilized, the Government of Telangana (GoT) is responsible for replenishing the shortfall within 30 days (T+30), as per its guarantee commitment. 
• In the event the GoT does not replenish the DSRA within T+30, the state guarantee will be formally invoked.
• Following invocation of the guarantee, the Direct Debit Mechanism (DDM) will be triggered on the next day (T+31) to immediately transfer the shortfall amount directly into the DSRA.

Stress case Scenario
­Acuité has sensitised its projections over the bonds tenure by assuming a 40 percent reduction in expected receipts from land auctions. Even under this stressed assumption, the average debt service coverage ratio (DSCR) remains comfortable at ~2.92 times against the minimum requirement DSCR of 1.50 times. Additionally, HMDA is required to maintain DSRA equivalent to peak servicing obligation for two quarters, providing a significant liquidity cushion. In the event of any exigency of shortfall, the DSRA is mandated to be replenished within the stipulated timelines through Direct Debit Mechanism backed by Government of Telangana, thereby providing strong comfort even under stress scenario.

Structure related covenants:

• Unconditional and Irrevocable Guarantee from Government of Telangana for timely servicing of Interest and Principal in respect of Debentures / Bonds
• Maintenance of Debt Service Reserve Amount (DSRA) to the extent of fully covering the peak servicing requirements for 2 quarters as liquidity support.
• Stipulation for providing irrevocable standing instructions in respect of all accounts where Development Charges, ORR Impact fees and revenue from Tellapur Technocity get deposited to transfer the same on a daily basis to Development Charges Master Collection Account (DMCA)
• Stipulation for providing irrevocable standing instructions to DMCA to transfer 85% of the collections on a daily basis to Infrastructure Revenue Collection Account (IRCA).
• Stipulation for providing irrevocable standing instructions in respect of all accounts where Revenue from Designated Sources gets deposited to transfer the same on a daily basis to Infrastructure Revenue Collection Account (IRCA).
• Stipulation for invocation of Government Guarantee for impairment of DSRA if not remedied within 30 days of stipulated timelines and ensuring Conditional Escrow Mechanism on the Infrastructure Revenue Collection Account remaining active and activation of Default escrow Mechanism on Development Charges Master Collection Account.
• Obtain an undertaking from the State Government that it would maintain control on the issuer during the pendency of the debentures / bonds and in the event of any action leading to any impairment of Revenue from Designated Sources, as also collections in DMCA, the same shall be fully compensated by the State Government in a manner such that there is no adverse impact on the servicing capability of the Issuer.

• Maintenance of corporate existence.
• Compliance with applicable laws.
• No change of business other than as may be permitted under the terms of the Debenture Trust Deed.
• Creation of security and maintenance of security cover as per applicable law.
• Compliance with information covenants including submission of financial results and providing compliance certificate as agreed under the Debenture Trust Deed
• Intimation to the Debenture Trustee prior to undertaking or entering into any amalgamation, demerger, merger or corporate restructuring or reconstruction scheme proposed by the Issuer
• To enter into / execute the relevant lease agreement(s) and all other documents, deeds, notices, letters, agreements, declarations, undertakings, instruments and forms as may be required in relation to or in connection with or for the purposes of the Designated Land Bank
• Compliance with all terms of the Transaction Documents
• Listing of Debentures / Bonds within timelines prescribed under applicable laws
• No modification to the structure of Debentures / Bonds without prior approvals as required under Applicable Laws
• No wilful defaulter on the Board
• Minimum security coverage ratio of 1.25 times.
• Debt service coverage ratio of atleast 1.50 times.
• No modification to the Constitutional Documents which imposes restrictions on the Issuer in complying with its obligations under the Transaction Documents
• Not to sell, assign, transfer, dispose off its business undertakings or assets or Secured Properties other than as specified in Transaction Documents
• No change in financial year end date unless required by law;
• Full disclosure in respect of Use of proceeds in the Offer Documents
• Not to create any encumbrance on the Secured Properties without prior approval of the Debenture Trustee except as provided in the Transaction Documents
• Preservation of corporate existence and status
• Not do or voluntarily suffer any act which restricts right to transact its business
• Timely payment of all applicable dues
• Secured Properties to be adequately insured
• Intimate Debenture Trustee of all orders, directions, notices of a court or tribunal that may affect the Issue or Secured Properties
• Maintenance of Asset Coverage Ratio
• Compliance with anti-Bribery and Corruption Law
• Maintenance of Internal Controls
• Information Covenants in compliance with applicable laws and as agreed with the Debenture Trustee as detailed in the Key Information Document
• Further Assurances
• Additional covenants primarily relating to credit of securities, payment obligations and other covenants relating to the Debentures / Bonds
• Pre-authorization to Debenture Trustee to seek redemption payment related details from Account Bank
• Confirmation that the State Government of Telangana will make payments under the Deed of Guarantee cum Undertaking free from any withholding or deduction into the Bond Servicing Account and/or the Debt Service Reserve Account (as the case may be)
• Undertaking from the State Government that it would maintain 100% control on the Issuer during the pendency of the debentures / bonds.
• Issuer to ensure State Government of Telangana complies with all undertakings given by it and covenants applicable to it
• Undertaking by the Issuer that it would not create any kind of encumbrance or dispose in any way, any of the Designated Land Bank other than as specified in Transaction Documents.

­HMDA’s liquidity is adequate supported by steady inflows from development charges, ORR impact fees, TOT receipts, land monetization and revenues from Tellapur Technocity, which are routed through structured escrow mechanisms to ensure timely debt servicing. The average Debt Service Coverage Ratio (DSCR) is expected to be at ~3.25 times throughout the tenure of the bonds. Liquidity comfort is further enhanced by the explicit support from the Government of Telangana, which has undertaken to bridge any shortfall in servicing requirements prior to payout dates under the Guarantee Deed. The authority has unencumbered cash and cash equivalents of Rs.3,562.60 Cr. as on March 31, 2025 which provides, further liquidity support.

­None

­Supplementary disclosures for Provisional Ratings

A. Risks associated with the provisional nature of the credit rating.
1. Absence of any structured payment mechanism.
2. In case there are material changes in the terms of the transaction after the initial assignment of the provisional rating and post the completion of the issuance (corresponding to the part that has been issued) Acuité will withdraw the existing provisional rating and concurrently, assign a fresh final rating in the same press release, basis the revised terms of the transaction.

B. Rating that would have been assigned in absence of the pending steps/ documentation. 
The rating would be equated to the standalone rating of the entity: ACUITE AA-/ Stable.

C.Timeline for conversion to Final Rating for a debt instrument proposed to be issued.
The provisional rating shall be converted into a final rating within 90 days from the date of issuance of the proposed debt instrument. Under no circumstance shall the provisional rating continue upon the expiry of 180 days from the date of issuance of the proposed debt instrument