VIJAYAWADA: The Amaravati bonds, to be issued by the CRDA to raise funds for capital construction, are expected to make debut in the bond market in the second week of July. The authority will conclude the tendering process to identify the arranger, which will help it in mobilisation of funds, by the weekend.
Even though the Capital Region Development Authority (CRDA) had initially planned to raise funds for Am aravati in the first week of June, the delay in zeroing in on the arranger resulted in a longer wait to tap funds by selling bonds. “The finalisation of tender to pick an arranger is in the last leg and will be concluded in two-three days. We can go ahead with the bonds issuance in the next ten days or so,” a top ranking official told TNIE. The CRDA aims to raise up to Rs 2,000 crore with the bonds.
A+ rating for CRDA bonds
Meanwhile, CRISIL has assigned a provisional rating of A+ with a stable outlook to the bonds proposed by CRDA. “It is a shot in the arm for the CRDA as CRISIL, which is a noted credit rating agency, acknowledged the good economic management by the State in its provisional rating given last week. As there is a positive buzz in the market, we expect to raise Rs 500 crore initially and later scale it up to Rs 2,000 crore,” another official explained.
While the CRISIL identified the “unconditional and irrevocable guarantee” extended by the State government as a strength of CRDA, it observed that the land monetisation, through which the authority plans to accrue primary cash flows, would be a challenge.
“CRDA’s primary cash flows for bond servicing are revenues accrued from land monetisation, with potential additional revenue streams from development charges, utility charges etc. CRISIL believes that timely and adequate monetisation for debt servicing could be a constraint, dependent on land appreciation through the expected development of the Amaravati,” the CRISIL report observed.
Tough time ahead?
While the CRISIL identified the “unconditional and irrevocable guarantee” extended by the State government as a strength of CRDA, it observed that the land monetisation, through which the authority plans to accrue primary cash flows, would be a challenge.