NaBFID eyes partial credit enhancement for bonds worth ₹15,000 cr in H2FY26

National Bank for Financing Infrastructure and Development (NaBFID) is looking to provide partial credit enhancement support to four to five projects to raise about ₹15,000 crore through bonds in the second half (H2) of the current financial year (2025-26 or FY26). These projects are likely to be predominantly from the renewable energy and roads sectors, according to a top NaBFID executive.

 

With credit support — first-loss guarantee — for projects, the expectation is that ratings for bonds would move up from "A" to "AA", facilitating investments from insurance and pension funds. This initiative was announced in the Union Budget 2025-26 to address gaps in debt flows for infrastructure projects.

 

A NaBFID executive told Business Standard that discussions are currently underway with rating agencies to assess the extent of credit enhancement needed for the projects. The government-owned financing institution should be able to address issues quickly and place proposals for credit enhancement before board committees. Once a rating backed by credit enhancement is in place, companies can begin the process of tapping the bond market in compliance with regulatory requirements, he added.

 

As far as the sectors are concerned, mostly completed projects from renewable energy and roads are on the radar for credit enhancement. There is also one company from the water treatment space, the executive said.

 

The Reserve Bank of India has issued norms relating to credit enhancement for projects. Some revision in norms is now required for the insurance sector to permit insurance companies to invest in bonds to be issued by special purpose vehicles (SPVs) set up for infrastructure projects. At present, insurance companies can invest only in bonds issued by holding companies.

 

The official said NaBFID, as part of its mandate for the development of the ecosystem for infrastructure financing, is taking up the issue of SPV bonds with the Insurance Regulatory and Development Authority of India (IRDAI).

 

The company commenced lending operations in the fourth quarter of FY23. Its total assets rose from ₹27,315 crore at the end of March 2023 to ₹55,129 crore in March 2024 and further to ₹83,210 crore at the end of March 2025.