The Andhra Pradesh Capital Region Development Authority (APCRDA), which had once received a high credit rating (AAA+) when it floated Amaravati bonds for Rs 2,000 crore in August 2018 to raise resources for construction of capital city, has lost its credibility in the stock market.
Reason is simple: the Jagan Mohan Reddy government has dumped the Amaravati capital city project completely and is planning to shift the entire administration to Visakhapatnam.
As a result, those who had subscribed to the Amaravati bonds floated in 2018 are worried about their returns.
The credit rating companies like Acuite have downgraded the ratings given to the APCRDA from BBB+ to C grade, as it has not taken up any projects in the capital.
Explaining the downgrading of the rating, the agency said APCRDA has delayed in timely servicing of its bank debt obligations during the month of October 2023 owing to its poor liquidity position.
As per the intimation received by the entity, the interest payment to the tune of Rs 14.36 crore towards the consortium loan that was due on October 31, 2023 was only paid on November 20, 2023. The bank debt was guaranteed by the state government.
Acuité has noted that the bond servicing account was not funded adequately as per the terms before the debt obligation to the tune of Rs 152 crore which was due on November 16, 2023.
However, it has not yet been replenished until November 30, 2023. as per the feedback received, which has resulted into the nonadherence of the structured payment mechanism.
The current available balance in the debt servicing account is around Rs 88 crore while the APCRDA still needs to arrange for shortfall of Rs 430 crore in order to ensure timely repayment of next obligation which falls due on February 16, 2024.
The same is expected to be met through additional budget allocation from he state government of Rs 570 crore, the rating agency said.
