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National Bank for Financing Infrastructure and Development (NaBFID) on Thursday said it was looking to raise about $1 billion from multilateral institutions to reduce overall cost of funds and diversify funding sources.
The state-owned company’s debut 10-year non-convertible debenture offering received bids of Rs 23,629 crore, almost 2.4 times the total size of the issue. It raisedRs 10,000 crore at a 7.43 per cent coupon, NaBFID said in a press release.
As for fixing of coupon, the indicative range was 7.4-7.45 per cent at the start of bidding, bond market sources said. Banks, insurance and pension funds were major investors in the bond offering.
NaBFID Managing Director Rajkiran Rai told Business Standard that the institution received a fine rate, given the present yield of around 7.02 per cent on government of India’s 10-year paper. It would have liked to get a 7.4 per cent rate.
He said the next domestic bond issuance would be by the end of the current financial year (FY24).
Besides raising funds from the market, NaBFID has tied up with banks for credit lines. It will also approach international markets and funding agencies like World Bank for relatively cheaper sources of funds for renewable energy and green finance, Rai said.
SBI Capital Markets was lead advisor and Cyril Amarchand Mangaldas was the legal advisor for the issuance.
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The bonds, unsecured non-convertible debt securities, and carrying AAA/Stable rating from CRISIL are expected to be listed shortly on the exchanges.
Besides the initial sizable capital infusion of Rs 20,000 crore, additional support through government grants of Rs 5,000 crore will help in reducing effective cost of funds for NaBFID and, in turn, its lending rates. Also, the institution will be entitled to short-term funding in form of a repo from the Reserve Bank of India (RBI) to manage short term liquidity shortfalls, if any, in the future.
The financier is looking to disburse funds to build an outstanding book of Rs 30,000 crore by end of September 2023. The institution, in less than its one-year of its operations, has disbursed approximately Rs 15,000 crore of loans, he added.
