Ifci To Tap Market For Rs 3,000 Crore

With a large number of banks turning down IFCI Ltd's request for rollovers and reinvestments, the financial institution has decided against exercising the call option on high-cost debt worth Rs 900 crore, which it had planned to retire in the current financial year.

The institution is, however, planning to raise Rs 3,000 crore during the current financial year, as against Rs 2,700 crore last year, despite the recent rating downgrades. The proposal was cleared by the institution's board recently. In addition, IFCI is planning a $100-200 million foreign currency loan during the current financial year.

Sources said these borrowings were a fresh intake for the Delhi-headquartered institution and it would also seek rollovers and reinvestments on bonds maturing this year.

 

IFCI's plans received a jolt after the Reserve Bank of India turned down a request to exempt banks and FIs from treating rollovers as non-performing assets (NPAs). Banks will now have to take decisions on rollovers independent of the NPA provisioning norms and as a result a lot of them have decided against providing fresh rollovers on investments worth around Rs 1,000 crore, as requested by the institution.

IFCI had earlier planned to exercise the call option in September 2002 on the Millionaire Bonds issued by it in 1996, which offer 16 per cent returns to investors. Institutional sources told Business Standard that the FI's first priority was to meet its obligatory repayment obligation and it would only exercise the call option if it was able to tie up funds, which at this point were not forthcoming.

They added that IFCI wanted to avoid a situation similar to the one in July 2001 when IFCI exercised the call option on Rs 700 crore worth of bonds, which added to the liquidity problem of an institution already stressed with bonds worth Rs 1,100 crore maturing in the month.

This year also there is a severe problem of bunching of payments with bonds worth Rs 4,500 crore maturing over the next few months of the current financial year followed by another Rs 5,000 crore next year.