NaBFID eyes $3-4 billion via ECBs in FY27, plans 10-year dollar bond issue

The infrastructure lender plans to issue $500 million-$1 billion in 10-year bonds by September-end and expects a multilateral-backed loan of nearly $1 billion

The National Bank for Financing Infrastructure and Development (NaBFID) is looking to raise $3-4 billion through external commercial borrowings (ECBs), comprising both loans and bonds, this financial year, managing director and chief executive officer Rajkiran Rai G said on the sidelines of an IBA event in Mumbai.

 

Of this, the institution is planning a dollar bond issuance of around $500 million-$1 billion, depending on market appetite, through 10-year bonds, Rai said. The issuance is expected by the end of September this year.

 

Separately, a multilateral-guaranteed ECB transaction of close to $1 billion — under discussion for a while — could also materialise within this quarter once approvals from the multilateral agency come through, likely around October, he said. This would be 10-15-year money and would fall within the overall $3-4 billion ECB target for the year.

 

 

“One more likely transaction, which will be guaranteed by a multilateral, is under process for a long time and that also may materialize, that will be close to $1 billion. But that will be 10 year- 15 year money; there are guaranteed structures available internationally. This is not because the swap window is available, but luckily for us, it is also maturing at this time, so we plan to use that. It is not refinance, it is a borrowing only, an ECB loan borrowing, guaranteed by one of the multilaterals. We are expecting the month of October, but there is approval needed from the multilateral, so we don’t want to pre-empt that. We assume that by this quarter-end we may have all the approvals,” Rai said.

 

NaBFID last month tied up $850 million, raised at the secured overnight financing rate (SOFR) plus around 120 basis points, Rai said, adding that pricing in the overseas market remained reasonable even though rates had moved up after the recent RBI-related announcement.

 

On partial credit enhancement, Rai said the product has been launched and sanctions have gone through, including ratings for one case, but the ecosystem currently is not favourable for companies to move from bank loans to the bond market. “Banks are giving cheap money... if he is already at a cheaper rate, there is no incentive for him to move to bond market,” Rai said, noting that NaBFID is waiting for the rate differential between loans and bonds to widen before pushing the product further.

 

Rai said NaBFID continues to help companies refinance dollar bonds into rupee debt, having completed at least three such transactions, as adverse currency movements make rupee credit more attractive than dollar borrowing for many issuers. The institution has developed a “restricted group structure” for renewable energy companies, pooling cash flows across dozens of special-purpose vehicles tied to individual project contracts, which improves credit ratings and lowers borrowing costs, he said.

 

On the proposed self-regulatory organisation (SRO) for infrastructure lenders, Rai said NaBFID has now received all the necessary approvals after two rounds of consultations with like-minded players and expects the body, which could initially have around 15 members, to be formally announced within a month. He said the SRO would be open to both banks and non-banking financial companies (NBFCs) and would aim to collectively represent infrastructure-sector concerns to regulators and the government.

 

On municipal bonds, Rai said the segment has seen strong activity, with over ₹2,600 crore raised last year, more than half of it through NaBFID, which has underwritten or supported nearly 80-90 per cent of such issuances. He expects municipal bond volumes to touch close to ₹10,000 crore this year.

 

Rai also confirmed that NaBFID is setting up a $500 million pure-equity fund as a subsidiary, NaBFID Fund Management Company (NAFINCO), at GIFT City, Gujarat, for which premises have been secured and hiring is under way. The unit is expected to be formally inaugurated by December, though the timeline could spill over into the following quarter, he said.

 

On overall lending, Rai said NaBFID is on track to cross a loan book of ₹2 trillion by March, with disbursements progressing according to target.