India’s newly created infrastructure-financing institution is planning a maiden bond issue of $610 million in the next quarter, according to a senior official at the company.
The institution wants to test the market in terms of pricing with the small issuance, Rajkiran Rai, Managing Director at the National Bank for Financing Infrastructure and Development, India’s new development finance institution, said in an interview.
NaBFID, as the infrastructure-focused lender is called, plans to leverage the Government’s equity capital to the extent of ₹3-4 lakh crore through the issuance of Tier-1 and Tier-2 bonds, among others, according to Rai. “It may take us three years to get there,” he said.
India’s creaking infrastructure requires nearly $1 trillion in financing by 2025 and is a keystone of Prime Minister Narendra Modi’s agenda to accelerate economic growth. In the latest budget, the Government proposed raising capital spending by a third to ₹10 lakh crore, which will boost NaBFID’s agenda, Rai said.
The institution will tap pension funds and insurance companies to raise funds and aims to finance the capital needs of various sectors, including energy and transmission, airports, ports, and urban infrastructure, Rai said.
NaBFID plans to disburse between ₹1-1.5 lakh crore of loans from a pipeline of ₹50,000 crore worth of projects in the next quarter, Rai said.
The lender was created with an initial capital of ₹20,000 crore and a grant of ₹5,000 crore through the Indian government’s 2021 budget to finance and “crowd in” capital into the country’s infrastructure projects.
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