GMR set to launch India’s first long-term infrastructure bonds

One of India’s fastest growing infrastructure companies, GMR group is all set to launch the country’s first long-term infrastructure bonds issue next month.

GMR aims to raise Rs 360 crore for its highway project through credit enhancement scheme of the state-owned lender India Infrastructure Finance Company Ltd (IIFCL).

Towards this, IIFCL would guarantee the bonds issue to the tune of 30% that helps GMR improve credit rating of its highway special purpose vehicle (SPV) enabling, making it attract long-term funds from insurance companies and pension funds, SK Goel, IIFCL chairman and managing director told TOI.

Goel said that GMR is the first among the four credit enhancement schemes that IIFCL is taking up on a pilot basis to channelize long-term funds towards a robust long-term bonds market in India. The otherthree infrastructure projects that IIFCL will help raise long-term funds include an airport, a seaport and a power project, which in all will raise some Rs 2,000 crore through the bonds issues.    

The guarantees extended by IIFCL, varying from 30%-50% of the bonds issues, will assist the infrastructure developers improve their credits ratings to reach AA and above, to meet the investment requirements of insurance firms and pension funds.