CRISIL downgrades Andhra Pradesh Capital Region's Rs 2,000 cr bonds

Mumbai, Aug 20 The ratings agency CRISIL has downgraded the Andhra Pradesh Capital Region Development Authority's (APCRDA) bonds worth Rs 2,000 crore, to 'CRISIL A-(CE)' from 'CRISIL A+(CE)', and placed the ratings on 'Ratings Watch with Negative Implications'.

This is because of non-adherance to the T-structure by the region due to failure to maintain funds amounting to next two quarters of debt servicing obligations in the debt service reserve account.

"The rating action also reflects the increasing strain on the financial risk profile of the guarantor, GoAP, as manifested, in among others, the reduction in its funding support to meet APCRDA's debt repayment obligations," the ratings agency said.

According to the T-structure, government of Andhra Pradesh is required to credit in advance, the bond servicing account with funds worth 1.5 times the upcoming debt repayment obligation.

However, in case this is not done by T1-7 days, funds from the DSRA will have to be utilised to fund the bond servicing account.

Since the account was not sufficiently funded to meet the interest obligation falling due on August 16, the trustee dipped into the DSRA and used around Rs 26 crore to partially service the interest of Rs 52 crore.

Consequently, APCRDA currently has only 1.5 quarters of funded DSRA.