Government of Andhra Pradesh Bonds: Structure, Yield, Rating & Key Risks

Introduction

State-linked bonds form an important segment of India’s fixed-income market, enabling state governments and state-backed entities to raise long-term capital for infrastructure and development projects. Among these, Government of Andhra Pradesh bonds are often issued through statutory authorities created by the state government.

Searches for government of andhra pradesh bonds usually reflect interest in understanding how such bonds are structured, how yields are determined, and how they differ from traditional state development loans or central government securities.

This article provides a purely educational explanation of Government of Andhra Pradesh bonds, using the Andhra Pradesh Capital Region Development Authority bond as a reference example, without offering investment advice.

What Are Government of Andhra Pradesh Bonds

Government of Andhra Pradesh bonds generally refer to debt instruments issued by state-owned or state-backed entities to finance public infrastructure and development initiatives. These bonds are not always issued directly by the state treasury; instead, they are often issued by statutory authorities established under state legislation.

Such bonds:

• Are linked to state-level development projects

• Provide periodic interest payments

• Have defined maturity timelines

• Are typically listed for secondary market trading

The Andhra Pradesh Capital Region Development Authority bond is an example of such a state-linked instrument.

Issuer Structure: Andhra Pradesh Capital Region Development Authority

The Andhra Pradesh Capital Region Development Authority (APCRDA) is a statutory authority constituted by the Government of Andhra Pradesh. It was established to plan, develop, and manage infrastructure in the state’s capital region.

Key characteristics of the issuer include:

• Ownership: State government–owned public sector entity

• Industry: Utilities and infrastructure development

• Head Office: Vijayawada

• Role: Urban planning, infrastructure development, and capital region management

While APCRDA is state-owned, its bonds are obligations of the authority itself rather than direct obligations of the state government.

Key Features of Government of Andhra Pradesh Bonds

The following features describe the Andhra Pradesh Capital Region Development Authority bond (ISIN INE01E708032):

• Issuer: Andhra Pradesh Capital Region Development Authority

• ISIN: INE01E708032

• Instrument Type: Bond

• Nature: Listed

• Issue Size: ₹400 crore

• Date of Issue: 16 August 2018

• Maturity Date: 16 August 2026

• Face Value: ₹2,00,000 per bond

• Coupon Rate: 10.32 percent

• Interest Payment Frequency: Quarterly

• Tax Treatment: Taxable

• Credit Rating: BBB+(CE) by CRISIL Ratings

• Security: Unsecured

• Seniority in Repayment: Not specified

• Call / Put Option: Not available

These parameters define how the bond functions and how cash flows are structured.

Bond Instrument Structure Explained

The Andhra Pradesh bond is structured as a listed, unsecured bond issued by a state-owned development authority. Key structural elements include:

• Unsecured Nature: The bond does not carry specific collateral backing

• Non-Convertible: The instrument does not convert into equity

• Fixed Coupon: Interest rate remains constant over the tenure

• No Embedded Options: No call or put options are attached

The absence of collateral and seniority ranking makes credit assessment particularly important for such instruments.

Coupon Rate and Yield Characteristics

Coupon Rate

The bond carries a fixed coupon rate of 10.32 percent, calculated on the face value of ₹2,00,000. Interest is paid quarterly, resulting in four interest payments each year.

Yield Consideration

The coupon rate reflects the contractual interest obligation. Market-linked yield may differ based on:

• Purchase price in the secondary market

• Remaining time to maturity

• Prevailing interest-rate conditions

Yield metrics are indicative and depend on market pricing rather than being guaranteed.

Face Value, ISIN, and Listing Details

Face Value

The face value of ₹2,00,000:

• Forms the base for interest calculation

• Represents the principal repayable at maturity

ISIN

The bond is uniquely identified by ISIN INE01E708032, which allows:

• Accurate identification of the bond series

• Trading and settlement through recognised systems

• Access to disclosures and rating reports

Listing Status

The bond is listed, enabling secondary market trading. Listing enhances transparency but does not ensure liquidity.

Credit Rating and Its Interpretation

The bond is rated BBB+(CE) by CRISIL Ratings.

This rating indicates:

• Moderate degree of credit risk

• Adequate capacity to meet financial obligations

• Higher sensitivity to adverse economic or business conditions compared to higher-rated instruments

The “CE” suffix typically reflects credit enhancement, the nature of which should be evaluated through detailed offer documents.

Credit ratings are opinions, not guarantees, and may change over time.

Interest Payout and Maturity Profile

Interest Payout

• Paid quarterly

• Fixed amount based on the coupon rate

• Payment dates are pre-defined

Maturity

• Scheduled maturity on 16 August 2026

• Principal repayment is due at maturity

Because the bond has a defined end date, interest-rate sensitivity reduces as maturity approaches.

Liquidity and Secondary Market Trading

Although listed, liquidity in state-authority bonds can vary. Factors influencing liquidity include:

• Issue size

• Market participation

• Time remaining to maturity

• Interest-rate environment

Prices in the secondary market may fluctuate independently of coupon payments.

Risks Associated With Government of Andhra Pradesh Bonds

Key risks include:

• Credit Risk: Dependence on the issuer’s financial health and revenue generation

• Interest Rate Risk: Market prices may decline if interest rates rise

• Liquidity Risk: Limited trading volumes may affect exit

• Structural Risk: Unsecured nature and absence of repayment seniority

• Project Execution Risk: Linked to infrastructure development outcomes

These risks exist irrespective of state ownership.

Comparison With Other State Government Bonds

Compared with direct State Development Loans (SDLs):

• Authority bonds often carry higher credit risk

• Yields may be higher to reflect this risk

• Liquidity may be lower

• Compared with corporate bonds:

State-linked bonds may benefit from implicit government association

Common Misconceptions

Common misconceptions include:

• All state-linked bonds are fully guaranteed by the state

• High coupon rates imply low risk

• Listing ensures easy exit

• Credit ratings eliminate default risk

Understanding issuer structure helps clarify these assumptions.

Conclusion

Government of Andhra Pradesh bonds, particularly those issued by statutory authorities like the Andhra Pradesh Capital Region Development Authority, represent a distinct segment of India’s bond market. Their structure, yield, and credit profile differ from both central government securities and corporate bonds.

A clear understanding of issuer structure, coupon mechanics, credit rating, and risks is essential to interpret how these bonds function within the broader fixed-income ecosystem.

Disclaimer

This blog is intended solely for educational and informational purposes. The bonds and securities mentioned herein are illustrative examples and should not be construed as investment advice or personal recommendations. BondScanner does not provide personalized investment advice through this content.

Readers are advised to independently evaluate investment options and seek professional guidance before making financial decisions. Investments in bonds and other securities are subject to market risks, including the possible loss of principal. Please read all offer documents and risk disclosures carefully before investing.