IIFCL raises USD 500 mn ECB at lowest cost for 15 years tenure

New Delhi, Dec 5 (PTI) State-owned IIFCL has advanced plans to raise External Commercial Borrowings (ECBs) up to USD 500 million through Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group-supported guarantee facility aimed at financing priority infra projects across the country.

The ECB raise is expected to strengthen IIFCL's ability to finance long-term infrastructure projects, matching the amortising profile of typical infrastructure loans benchmarked to floating rate.

This avoids the fixed rate-fixed tenure shock as in bonds, India Infrastructure Finance Company Ltd (IIFCL) said in a statement.

IIFCL received an overwhelming response under the RFP process, wherein bids amounting to nearly five times the proposed USD 500 million facility were submitted by 12 leading international banks across multiple currencies (USD, EUR, and JPY).

Major participants include Citi Bank, JP Morgan, Standard Chartered, HSBC, Société Générale, SMBC, Credit Agricole-Corporate & Investment Bank, BNP Paribas, MUFG, Commerzbank, BBVA, and Deutsche Bank.

Commenting on the development IIFCL Deputy Managing Director Palash Shrivastava said the overwhelming response from global lenders reflects confidence of lenders in India's growth story, particularly the sustained expansion of its infrastructure.

"The success not only strengthens IIFCL's ability to channelise long-term international capital into priority projects but also paves the way for other institutions to tap global funding more effectively. We remain grateful to our stakeholders and government for their continuous support," he said.

The initiative follows deliberations for structuring a dedicated guarantee product under the Non-Honouring of Financial Obligations by a State-Owned Enterprise (NHFO-SOE) programme by MIGA, it said.

MIGA has since granted in-principle approval to extend its guarantee under the said programme for USD 500 million, enabling IIFCL to raise international resources aiming private capital mobilisation without requiring a Government of India guarantee, it said.

This initial USD 500 million tranche forms part of a larger programme estimated at up to USD 2.5 billion, it said, adding that the ECB will have a 15-year door-to-door tenor.

Under this arrangement, MIGA will provide coverage up to 95 per cent on principal and future interest and also has an elements of embedded hedging structure. Financial closure for the first tranche is targeted in this quarter, it said.

The facility will support sectors listed under the harmonised master list of infrastructure sub-sectors, with particular emphasis on sustainable and climate-aligned projects, it said. PTI DP TRB