International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, has launched a $2.5 billion onshore bond programme denominated in Indian currency to fund infrastructure projects in the country.
Under the programme, IFC will use a combination of rupee-denominated bonds and swaps to raise local-currency financing of up to $2.5 billion (Rs 15,000 crore) over the next five years.
“Vibrant capital markets provide critical access to finance for the private sector,” said Jin-Yong Cai, IFC’s CEO.
“Bonds offered under IFC’s rupee financing programme offer a safe investment alternative for domestic pension funds and other investors, while mobilising capital to address India’s infrastructure needs," Cai added.
Arvind Mayaram, secretary of economic affairs in the Ministry of Finance, said, “The onshore bond programme marks another important milestone in the engagement between India and IFC. Issuance of onshore bonds by IFC in the Indian bond market, with offer of longer tenor bonds, will deepen the bond market and also provide the much-needed finance to infrastructure projects."
India accounted for $1.2 billion of IFC’s committed investment portfolio as of March 31, 2014. In FY13, IFC invested $1.38 billion in India to achieve several strategic priorities such as promoting inclusive growth in the country’s low-income states, addressing climate change and supporting global economic integration.
IFC is the first international or corporate issuer of local-currency bonds in a market. When issuing local-currency bonds, IFC said that it works closely with regulators and market participants to refine the regulatory framework, encouraging greater participation in the local markets and providing a model for other international issuers.
Last year, IFC launched a $1 billion offshore bond programme denominated in Indian currency to fund private projects in the country. Under the programme, it offered six separate issuances between November 2013 and April 2014; four with maturities of three years, one of five years, and the final tranche of seven years.
(Edited by Joby Puthuparampil Johnson)