VIJAYAWADA: With the state cabinet clearing the decks for raising funds for capital construction by issuing bonds, the AP Capital Region Development Authority (APCRDA) is gearing up to float them in the next two weeks.
Once the bonds, titled Amaravati Bonds, are released into the market, the authority is likely to get the funds by the end of the month. “The cabinet has given its nod, but we are awaiting the issuance of the government order. Once that is issued, we will enter the market. We will list the Amaravati Bonds on the Electronic Bidding Platform/ Bond Platform of the Bombay Stock Exchange (BSE) in about 10 days,” a senior official monitoring the process of bonds issuance told TNIE. The CRDA expects to raise Rs 1,300 crore at a coupon rate of 10.32 per cent. If the bonds receive good response, there is a greenshoe option to raise another Rs 700 crore.
Sources in the CRDA said that before the cabinet approved the bonds proposal, the finance department raised red flags as the coupon rate of over 10 per cent would burden the already cash-strapped exchequer.
However, the CRDA officials maintained that the coupon rate was arrived at keeping in mind the market conditions. “The interest rate is well calculated. We don’t have funds readily available to take up the works. If we wait, hoping for a better rate, cost of establishment will escalate and result in cost overrun. So for the project to go forward, bonds will be an advantage,” the official explained.
The official added: “Compared to the rates that HUDCO and other agencies offer, we have proposed a competitive price. It is also an advantage as the coupon rate would remain fixed for ten years, unlike the bank interest rates, which are revised often.”
Meanwhile, the officials are also expecting a positive reply from the World Bank regarding the sanction of Rs 3,300 crore by September. “Besides the World Bank, loans from Indian Bank, Vijaya Bank and Andhra Bank are also expected to be released shortly,” another official added.