State Government Debt Risk - a history that repeats too often!



As the work on building Amravati, the new capital city AP, comes to a grinding halt, concerns emerge about Amravati (APCRDA) bonds held by Franklin MF (~Rs. 1000 Cr) and Birla MF (Rs. ~300 Cr). Thread 1/11

During the Chandrababu Govt, Amravati received political as well as financial patronage. Now, with Jagan Reddy being incharge of the state, the project is in shambles. World Bank & ADB pulled out of the project and the Government is looking for reasons to scrap it. 2/n

The bonds issued to support the financing needs of the project were subscribed by Franklin MF and Birla MF. The bonds are guaranteed by the AP Govt but it's not sure if the Govt would keep servicing the bonds. The risk of lending to a state govt has again come to the fore. 3/11