India’s new infrastructure lender plans debut $610 million bond

Workers construct an overbridge outside the Deendayal Port Authority in Kandla, India, on Thursday, Sept. 8, 2022. India is scheduled to announce its CPI figures on Sept. 12. Photographer: Prashanth Vishwanathan/Bloomberg

India’s newly created infrastructure-financing institution is planning a maiden bond issue of 50 billion rupees ($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 three or four trillion rupees through 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 trillion rupees, which will boost NaBFID’s agenda, Rai said.

The institution will tap pension funds and insurance companies to raise funds and aims to finance capital needs of various sectors including energy and transmission, airports, ports and urban infrastructure, Rai said.

NaBFID plans to disburse between 100 billion to 150 billion rupees of loans from a pipeline of 500 billion of rupees worth of projects in the next quarter, Rai said.

The lender was created with an initial capital of 200 billion rupees and a grant of 50 billion rupees through the Indian government’s 2021 budget to finance and “crowd in” capital into the country’s infrastructure projects.