High safety BDA bonds make it to NSE

BANGALORE: ``The Bangalore Development Authority (BDA) is the Infosys of the government'''', was a remark made by a government employee recently. Not just for effect. The BDA is probably the first statutory body to be listed on the National Stock Exchange of India, where its non-convertible bonds will be traded.
The BDA''s Rs 100-crore bond issue was fully subscribed in a matter of a few minutes on August 5, on account of prior private placement.The event was dramatic and on Wednesday, the bonds will be allotted to bondholders Canara Bank and Indian Overseas Bank, at an interest rate of 8.50 per cent for a tenure of five years.
For the second time, ICRA has improved its rating of the BDA from LAA to LAA+ which indicates `High Safety''. The Karnataka government has a rating of only LA+ which indicates `Adequate Safety''. According to ICRA''s debt rating symbols, LAA+ indicates that the risk factors are modest and may vary slightly. ``The protective factors are strong and the prospect of timely payment of principal and interest as per terms under adverse circumstances, as may be visualised, differ from LAA only marginally.''''
BDA is probably the only government organisation in the country to have ventured into the financial market to borrow for its developmental projects like roads and flyovers, without government guarantee. Says a beaming BDA Commissioner Jayakar Jerome, ``Beyond the construction of ring roads, flyovers and demolitions, for us it is public confidence which has borne through our strong financial statement.'''' And to think that a high-powered committee had suggested the dissolution of the body, before the S.M. Krishna government appointed a new commissioner in Jerome.
BDA''s rating by ICRA is higher than that of Telco, Tisco, Bajaj and a few Birla companies. The Comptroller and Auditor General was also asked to rate this government agency on an invitation basis. ``For 5,000 sites, we get 48,000 applications and this is an indication of the trust people have in us,'''' says Sandeep Dash, Finance Member, BDA. He adds that this is the first time a government agency has entered the market like a private sector company.
The bond money will also rejuvenate two lakes in the city, Agra Lake at H.S.R. Layout and the Beneganahalli Lake, and that is good news for green-loving Bangaloreans.