According to sources familiar with the matter, the Andhra Pradesh State Beverages Corporation is expected to raise around INR 5,000 crore by issuing bonds in early August.
“They are likely to carry out the bond sale around August 10. It is for up to INR 5,000 crore and is in the STRIPS (separate trading of registered interest and principal securities) format for 10 years,” said one of the persons cited earlier.
The STRIPS facility enables the separate purchase and sale of a bond’s coupon payments and principal amount as individual securities. In essence, investors can trade the cash flows of a bond independently.
These bonds are commonly known as ‘zero-coupon’ bonds, which implies that they do not offer interest payments. Instead, their allure for investors lies in the fact that they are purchased at a substantial discount, significantly below the face value to be paid upon maturity. Recently, the AP State Beverages Corp managed to raise INR 10,005 crore through two series of NCDs (Non-Convertible Debentures) at an interest rate of 9.62%.
