Mumbai, Feb 20: The Credit Rating Information Services of India Ltd (Crisil) has assigned an A (SO) rating to the Rs 125-crore bond programme of Bangalore City Corporation indicating adequate safety with regard to timely payment of financial obligations on the instrument.The rating reflects the credit enhancement mechanism in the form of an escrow account which would collate property tax revenues and State Finance Corporation (SFC) grants, as well as support provided by the government of Karnataka. The legal structure and repayment mechanism have also been factored while assigning the rating.
The property tax collections and SFC grants would be collated into the escrow account, which would be deployed towards the debt-servicing requirements. A tripartite agreement between the state government, the trustees on behalf of the investors and the corporation would be signed. This agreement would ensure that in case of a shortfall in the escrow account, the Karnataka government would step in and make good theshortfall.The proposed repayment mechanism involves collation and deposit of property tax and SFC grant revenues during a particular period into a central property tax collection account. During this period, the requisite funds would be transferred to a designated escrow account. Similarly, the SFC grants would be transferred to the escrow account.
Karnataka is financially one of the stronger and better managed states. Crisil feels that the underlying fundamentals of the economy are strong and barring a few worrying trends, the future prospects of the state seem to be favourable.
Crisil has assigned an AA+ (SO) rating to the Rs 57.39-crore debenture issue of Kudremukh Iron and Steel Company (Kisco), which indicates a high degree of safety regarding the timely payment of interest and principal on the instrument. The rating is based on the guarantee provided by the Kudremukh Iron Ore Company Ltd, the parent company of Kisco, along with a payment mechanism built in to ensure timely payment of obligations onthe rated instrument.
Crisil has also assigned a triple A rating to the fixed deposit (FD) programme of Kudremukh Iron Ore Company (KIOCL). The rating reflects the company's favourable capital structure as well as its track record of efficient operations and profitability. KIOCL is a 100 per cent export-oriented unit engaged in the production and sale of iron ore concentrate and pellets, mainly to Asian countries. Nearly 99 per cent of the equity capital of the company is held by the government of India.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
