NABARD plans 100-bln-rupee issue of 10-year infra bonds Dec, sources say
Informist, Friday, Nov 24, 2023
By Subhana Shaikh
MUMBAI – National Bank for Agriculture and Rural Development is looking at raising around 100 bln rupees through infrastructure bonds, sources familiar with the development told Informist. "It is a big-sized issue…the amount would be something around 10,000 crores (100 bln rupees), and we have heard that they might come next month," a source in the know said.
A source involved in the transaction said, "Yes, they are planning to raise it, but the quantum has not been decided yet and are still in talks with investors and after that they will decide."
In the past, NABARD has raised funds by issuing government serviced and social sector bonds, this infrastructure bond offering would be the first of its kind for the frequent issuer, sources said.
"Earlier, they used to issue such special types of bonds with the government's permission, but this one would be the first of its kind," the source said, adding that the maturity of the bond may not be more than 10 years.
NABARD's proposed issue comes at a time when several companies and banks are lining up infrastructure bonds in view of buoyant economic activity and strong credit off-take.
"They have a lot of infrastructure financing, and they are seeing a pickup there and hence, planning for an infra bond issuance," the source said.
In September, NABARD Chairman Shaji K.V. had said that there is a need to raise funds through infrastructure bonds. "We want to have longer-term bonds, we want to issue infrastructure bonds because we are one of the major players in the rural infrastructure space, and we want to support that. We are planning, but we have not arrived at a definite timeline yet," he had told Informist on the sidelines of its maiden social sector bonds.
NABARD had then raised 10.41 bln rupees against 30 bln rupees it had set out to borrow through India's first-ever social sector bonds maturing in five years at a coupon of 7.63%.
In September, Shaji had also said that NABARD is planning to raise funds through green bonds in the current financial year.
Market participants said NABARD is looking to raise around 50 bln rupees through green bonds, of five-year maturity, in 2023-24 (Apr-Mar).
Other major players such as National Bank for Financing Infrastructure and Development, or NaBFID, DME Development and India Infrastructure Finance Co Ltd are also likely to line up bond issuances.
"Yes, they (NaBFID) are planning to issue another tranche. They could hit the market by second of third week of December," another source said. However, some market participants said the development finance institution could tap the primary market in the next quarter owing to lower disbursements.
In June, when the infrastructure lender raised 100 bln rupees through 10-year bonds at 7.43%, NaBFID Managing Director Rajkiran Rai G. had said the company was planning its next bond offering of up to 100 bln rupees in Oct-Dec. End