“The bond will be priced on Monday with a base issue size of ‘1,000 crore with the option of increasing the size by another ‘4,000 crore. Insurance companies and pension funds which are the only buyers of this security have already been sounded off,” said a person aware of the issue. The company’s debt is rated AAA.
For NaBFID, set up by a Parliament act in 2021, it means tapping long-term funding sources for its infrastructure financing. A 20-year issue will allow the company to match its assets, which are between 15 and 25 years.
“A 20-year bond is a rare issue. Companies like Power Finance and Rural Electrification normally issue 10 to 15 years max, so this is a new tenure. Last month, another infra financier IIFCL had raised Rs 515 crore by selling 15-year bonds at 7.39%. This NaBFID bond will be priced at around those levels,” said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap LLP, a fixed income advisory.
SBI Capital Markets is the sole arranger for the issue. NaBFID and SBI Caps did not reply to an email seeking comment.”For NaBFID this issue goes beyond fundraising because it helps test appetite for a long-tenure bond which matches with the lender’s asset size. It helps them develop a long-tenure market and if successful will mean more such long-tenure issues in the future,” the person cited above said.Earlier only the National Highways Authority of India (NHAI) has issued 20-year bonds but it has stopped raising money from the market and is now dependent on government grants.NaBFID also has plans to sell more long-term bonds with a likely 25-year issue also possibly later this fiscal. Currently banks raise infrastructure bonds regularly from the market but those are mostly of a seven to 10 year tenure.