IIFCL plans to borrow $1 billion in a 15-year foreign-currency loan at under 7% interest, and is in talks with ADB for an additional $400 million 20-year loan.
The fundraising is part of a broader $1.6 billion resource mobilisation plan, with IIFCL also exploring a $600 million blended finance facility, a debut Green Bond, and a $100 million dollar bond by year-end.
The move follows RBI's subsidised foreign borrowing window, which has triggered a wider overseas fundraising rush among Indian financial institutions including HDFC Bank, Axis Bank, and Power Finance Corp.
IIFCL Plans $1 Bn Foreign Loan, In Talks With ADB For $400 Mn More
The decision follows a rise in dollar borrowings after the Reserve Bank of India introduced a subsidised foreign currency borrowing facility to increase dollar inflows and stabilise the rupee
IIFCL Plans $1 Bn Foreign Loan, In Talks With ADB For $400 Mn More File Photo
Summary
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India Infrastructure Finance Company (IIFCL) intends to raise $1 billion from international investors and is simultaneously considering an additional $400 million in financing from the Asian Development Bank (ADB), as per a Reuters report.
The decision follows a rise in dollar borrowings after the Reserve Bank of India introduced a subsidised foreign currency borrowing facility to increase dollar inflows and stabilise the rupee, making it one of the largest foreign currency loans.
The $1 billion loan will have a 15-year tenure with an interest rate below 7%, according to Palash Srivastava, deputy managing director of IIFCL, who spoke to Reuters. Separately, the company is negotiating with the ADB for an additional loan of about $400 million with a 20-year term.
Srivastava said IIFCL increased the size of the 15-year loan to $1 billion from the original $500 million after the RBI’s incentive scheme took effect.
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IIFCL is also considering issuing its first dollar-denominated bond of about $100 million by the end of the year, probably with a maturity of three to five years, he added.
According to an earlier report, three Indian development finance institutions intend to secure at least $1.5 billion in foreign-currency bank loans using the RBI facility.
RBI Window Sparks Broader Borrowing Rush
IIFCL's fundraising reflects a wider trend of Indian financial institutions tapping overseas markets following the RBI's subsidised borrowing window.
HDFC Bank secured $750 million through a five-year bond issuance, while Axis Bank raised $800 million by launching a dual-tranche dollar bond offering.
The state-run Power Finance Corporation has raised $300 million by issuing dollar-denominated bonds. Similarly, the State Bank of India and Bank of Baroda are planning to secure capital from overseas markets.
The overseas borrowing plan is part of a larger resource mobilisation strategy.
In March, IIFCL's Managing Director Rohit Rishi said that the company's plan was to raise $1.6 billion in total from multilateral agencies and overseas investors to support infrastructure development across the country.
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Until December, IIFCL raised JPY 26 billion from SMBC of Japan as External Commercial Borrowing. Going forward, he said the company is exploring a $600 million blended finance facility and a debut Green Bond issuance, and is also seeking approval to raise around $1 billion as long-term commercial debt without sovereign guarantee, in collaboration with MIGA, a World Bank Group entity.
Resource mobilisation for the next financial year will be aligned with projected loan book growth, with a focus on securing competitive, long-tenor funds and channelling greater institutional capital into Indian infrastructure.