VIJAYAWADA: With uncertainty looming large over World Bank funding for construction of Amaravati, the AP Capital Region Development Authority (CRDA) has begun the process of raising rupee denominated overseas bonds, also known as masala bonds. According to information, the CRDA plans to raise masala bonds up to Rs500 crore in the initial phase.
Sources told Express the officials were in talks with international agencies for getting credit ratings for the proposed masala bonds. “The process [for raising masala bonds] is underway. We have floated a Request for Quotation to finalise an international credit rating agency to help us get a rating for raising the bonds. The process is likely to take a couple of months,” a top official explained.Even though the CRDA has been contemplating the idea of masala bonds for raising money for construction of Amaravati for over two years, it has not moved forward.
The CRDA had initially planned to pool in Rs2,000 crore through masala bonds. Later, it has decided to raise it in a phased manner, starting with `500 crore.However, the body has a long way to go before it nets the desired funds. “It depends on a lot of factors such as getting a good rating, getting clearance from the Centre and RBI. We are hiring legal consultants for helping us expediting the process,” the official explained.
The CRDA invited Request For Proposal for appointing international and domestic legal counsels on Thursday.Besides helping the CRDA in legal issues, the counsels would also be liaising with all relevant stock exchanges internationally -- including Gujarat International Finance Tech (GIFT) City-- to procure listing of the bonds.
For the uninitiated, masala bonds, unlike the conventional dollar bonds, are raised overseas and linked to rupee, and the borrower repays in the Indian currency. This provides insulation to the borrower, who sells the bonds, from the volatile market fluctuation and other risks associated with currency exchange.
