State-owned India Infrastructure Finance Company Ltd (IIFCL) is planning to raise $1 billion from overseas investors in what could become its largest foreign-currency loan, while also holding talks with the Asian Development Bank (ADB) for a separate $400 million loan, a senior company executive told Reuters.The fundraising comes after the Reserve Bank of India (RBI) introduced a series of measures to encourage dollar inflows and support the rupee, including allowing state-run firms and banks to raise foreign-currency funds to hedge forex exposure at subsidised rates.
$1 billion loan planned
The proposed $1 billion loan will have a 15-year tenure and carry an interest rate of below 7%, while discussions with ADB are centred on a separate 20-year loan of about $400 million, IIFCL Deputy Managing Director Palash Srivastava told Reuters.Srivastava said IIFCL doubled the size of the proposed 15-year borrowing from an initial $500 million after the RBI announced the subsidised borrowing facility.Reuters had earlier reported that three Indian development finance institutions planned to raise at least $1.5 billion through foreign-currency bank loans under the RBI’s new framework.
Dollar bond also on the cards
Apart from bank borrowings, IIFCL is also evaluating its debut dollar bond issue of around $100 million by the end of the year.“The bond will likely be in the three- to five-year tenor,” Srivastava told Reuters.
RBI measures spur overseas fundraising
Dollar fundraising by Indian financial institutions has picked up after the RBI opened its subsidised foreign borrowing window.HDFC Bank has raised $750 million through a five-year bond, while Axis Bank priced an $800 million dual-tranche dollar bond. State-run Power Finance Corporation has also raised $300 million through dollar bonds.State Bank of India and Bank of Baroda are also planning overseas fundraising, Reuters reported.
