Crisil Rates Goa Govt'S Spv As A-

Crisil has assigned a rating of A- (SO) to the government of Goa (GoG) owned special purpose vehicle for its proposed Rs 100 crore infrastructure bonds .

Giving the rationale for the rating, Crisil has stated, "GoG's high level of indebtedness and Goa's relatively underdeveloped secondary sector are the factors limiting the rating."

The expected deterioration in GoG's finances on account of implementation of the Pay Commission recommendations has also been factored in the rating, Crisil added.

The rating is solely based on the credit enhancement mechanism provided in the form of financial guarantee from the government of Goa. The rating reflects GoG's above average revenue account performance on account of strong tax buoyancy, its satisfactory debt servicing capacity and Goa's superior social and demographic structure.

 

The proceeds of the bond issue will be utilised by three entities. While Kadamba Transport Corporation, the state owned transport corporation, will utilise Rs 20 crore, Rs 40 crore will be used to implement the Tillari irrigation project and Rs 40 crore to implement water supply & sewage disposal schemes.

The state government is in the process of finalising the responsibilities and capital structure of SPVs since there will be three different bond issues for the three entities.

The issue of timely servicing of financial obligations on the proposed bond issue would be addressed through a tripartite agreement between the respective SPV, GoG and the trustees of the bondholders.

According to the tripartite agreement, 45 days from the allotment of the bonds, the SPV would open an escrow and no-lien account (called designated account) with a bank for meeting the obligations on the proposed bond issue.

An amount equivalent to the forthcoming interest and principal payment would have to be transferred by the SPV into the designated account at least 45 days before the payment becomes due and payable. Any withdrawals by the SPV from this account would be subject to the approval of the trustees.

The state government, during the entire tenure of the bonds, would require to earmark an amount equal to the interest payment and principal instalment due in each year for disbursement out of its annual budgetary provision for the SPV directly into the designated account.