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| IIFCL plans $500-mn bond issue |
| BS Reporter / Mumbai Nov 11, 2009, 00:33 IST |
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Indian Infrastructure Finance Corporation (IIFCL), the New Delhi-based infrastructure financing institution, plans to raise over $500 million (about Rs 2,400 crore) through medium-term notes (MTN) to fund projects in such sectors as power, road, ports and airports. “We are planning to set up an MTN programme. It is early to take a call whether to tap American investors or raise money from Asian markets,” said R Rajgopalan, IIFCL’s senior vice-president, on the sidelines of the India-China Financial Conference.
With signs of a turnaround in global financial markets, the premium paid over the benchmark London Interbank Offer Rate (Libor) is shrinking.
“The institution will like to benefit from this trend,” he said. Asked about the rates (coupon) for MTN, he said IIFCL was fully-owned by the government. The rate should not be much different from what State Bank of India (SBI) was able to get for its recent MTN issue, he said. SBI, the country’s largest lender, raised $750 million through fixed-rate senior notes with a coupon rate of 4.50 per cent under the MTN programme. These bonds have a maturity of five years.
Elaborating on IIFCL’s borrowing plans, he said the institution had approached Japanese Bank of International Cooperation, which has done the due diligence and seen the project pipeline.
IIFCL recently drew $488 million from a sanctioned credit line of $500 million by the Asian Development Bank. IIFCL has one more credit line of $700 million from the Manila-based multilateral funding agency. Plus, World Bank and the German government-owned KFW have sanctioned $1.2 billion and $180 million, respectively. The infrastructure finance outfit has sanctioned loans worth $4 billion to 113 projects and has an outstanding loan book of $1.2 billion (about Rs 6,000 crore). The cost of these projects is pegged at $32 billion. IIFCL is working on norms for takeout finance, where the institution will enter into a pact with commercial banks to take over some of their infrastructure loans on its books.
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