The bonds will be categorised in terms of the risk involved and floated by the special purpose vehicles being considered for various infrastructure projects.
The Centre feels that such bonds can address the needs of all types of investors and provide an alternative to government bonds in a dormant bond market.
The model envisages the setting up of an asset management company, which in turn will float the special purpose vehicles for each infrastructure project.
The special purpose vehicles will offer at least three types of paper to the investors. Government officials said the proposal was aimed at establishing an alternative mode of financing infrastructure projects.
They said while there is a general perception that finance is not a problem for infrastructure projects, making finance available at easy rates makes it possible to price the output at a competitive rate.
The bonds to be offered to investors will range from the low-risk low-yield pattern to the high-risk high-yield variety.
The officials said the special purpose vehicles would only raise the finance, while the project would be executed by a project management company.
The separation of the asset management company from the special purpose vehicle is aimed at lowering the risks involved in the project.
The officials said only a regular issue of such paper could make the investors turn to this market in a big way.
This will especially help investors who are not keen to invest in equities, but are comfortable with long-term debt paper to augment their income.
The officials added that it was difficult to finance further infrastructure investment through cess or government guarantees and so the proposal to create a market for the financing of the project had become a viable option.
