Shocking Take On Amaravati Bonds

Wed Aug 15 2018 14:52:48 GMT+0530 (IST)

Capital Region Development Authority (CRDA) of AP opted for issuance of bonds for raising funds to construct new capital Amaravati. On Tuesday, Bonds issued by CRDA oversubscribed by 1.5 times on BSE. While the bonds available were worth Rs 1,300 crore, Institutional Investors had come forward to invest as much as Rs 2,000 crore within an hour.

AP CM Chandrababu Naidu & IT Minister Nara Lokesh claimed the response from the Investors reflects the faith people have on the AP Government. CRDA Commissioner Sridhar informed that the amount raised through bonds would be spent for infrastructure of Amaravati.

However, Former AP Chief Secretary IYR Krishna Rao opined Amaravati Bonds getting oversubscribed is quite normal when State Government has given an assurance & interest rate is on the higher side. He informed, 'Interest Rate of Amaravati Bonds is 10.32 percent…That's on Quarterly Basis. Last week, GHMC Bonds were subscribed for 8.9 percent. A Commission of Rs 17 crore was offered for these Bonds. I wonder in what way this is a profitable move'.

As much as Rs 48,000 crore were required for the First Phase of AP Capital. What other options would TDP Government explore for raising the balance amount?