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India Infradebt Plans To Raise Rs 1,000 Crores Through Bonds

The bonds have been rated as "AAA" with a "Stable" outlook by rating agencies CRISIL and ICRA

India Infradebt Limited is planning to raise Rs 1,000 crore through bonds that will mature in approximately two and a half years.

Additionally, on May 10, several Indian companies including Mindspace Business Parks Reit, ICICI Home Finance Company, SBFC Finance, Ashiana Housing, AK Capital Finance, Cholamandalam Investment and Finance Company, and Rural Electrification Corporation collectively raised funds worth Rs 5,705 crore through bonds.

The bonds will be offered to potential investors through a bidding process that will take place between 11 am and 12.30 pm on the electronic bidding platform of the Bombay Stock Exchange (BSE).

The bonds consist of a fixed coupon of 8.2450% and an XIRR (Extended Internal Rate of Return) of 8.28%.

The bond issue has a base size of Rs 500 crore with an additional Rs 500 crore greenshoe option. This greenshoe option gives the underwriter the right to sell investors more bonds than planned if the demand exceeds the expected amount.

The bonds have been rated as “AAA” with a “Stable” outlook by rating agencies CRISIL and ICRA. 

The pay-in date when the exchange of money and bonds takes place is on May 14. The minimum application size for investors is Rs 1 crore and can be made in multiples of Rs 1 lakh thereafter.

Power Grid, a state-owned power utility company, also plans to raise funds through bonds. They aim to raise to Rs 3,000 crore via 10-year bonds. The National Housing Bank is also planning to raise to Rs 3,000 crore through bonds on April 12.

According to data compiled from market sources, the yield on three-year corporate bonds fell by approximately 5 basis points, five-year bonds by 7 basis points, and ten-year corporate bonds by around 6 basis points. This was in line with the easing of government securities (G-Secs) yields, which fell by approximately 10-11 basis points due to easing global uncertainties, aided also by a buyback announcement.

Infradebt is an Infrastructure Debt Fund (IDF) under NBFC format, formulated by the Government of India, with the objective of creating an alternative class of funding infrastructure by bringing in long term domestic/offshore institutional investors like insurance companies, provident/pension funds, etc.

As per the regulation, Infradebt invests in operational infrastructure projects that have a minimum of 1 year of successful operations.

Infradebt has been set up by four leaders in the financial sector in India. ICICI Bank is the largest shareholder with a 42.3% stake, followed by Bank of Baroda 41%, Citicorp Finance India Limited 10% and Life Insurance Corporation of India 6.7%.

Infradebt primarily raises funds from the domestic market by issuing Non-Convertible Debentures (NCDs) having a maturity period of more than five years. The regulated business model and strong credit framework of Infradebt ensures ‘Highest Safety’ AAA returns for long-term investors. 

There are a diverse range of long-term investors, of which the prominent ones include: Life Insurance Companies, General Insurance Companies, Provident Funds, Pension Funds, Debt Mutual Funds.

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