IIFCL doubles planned loan to $1 billion after RBI's subsidised dollar-borrowing window; also in talks for $400 million ADB funding and a debut dollar bond.
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India Infrastructure Finance Company (IIFCL) is lining up a $1 billion overseas borrowing that would be its biggest foreign-currency loan, while separately seeking about $400 million from the Asian Development Bank, an executive said Monday.
The state-run infrastructure lender doubled the planned loan to $1 billion after the Reserve Bank of India opened a subsidised borrowing window for state-owned firms and banks. The facility lets them raise foreign currency funds and hedge forex exposure at cheaper rates, part of a broader push to boost dollar inflows and support the rupee.
The $1 billion loan carries a 15-year tenor at an interest rate under 7%, Palash Srivastava, IIFCL deputy managing director, told Reuters. The ADB loan, if finalised, would run 20 years and total roughly $400 million.
IIFCL is also weighing its debut dollar bond, around $100 million, by year-end. The bond will likely be in the three- to five-year tenor, Srivastava added.
The borrowing spree shows the RBI's incentive is working. In recent weeks, HDFC Bank raised $750 million via a five-year dollar bond, Axis Bank priced $800 million in a dual-tranche sale, and Power Finance Corp raised $300 million. State Bank of India and Bank of Baroda are planning similar overseas deals.
For IIFCL, the $1 billion loan replaces an initial $500 million target that had been set before the RBI measure. The bigger size means more long-dated foreign currency for infrastructure projects, where the company is a key lender. The ADB funding would add another 20-year tranche at what is likely concessional pricing.
A successful dollar bond debut would give IIFCL a third funding channel. The company has not issued a dollar bond before, Srivastava said, and the three- to five-year tenor would target a different part of the curve than the 15-year bank loan.
What would confirm the setup is working: further state-owned issuers tapping the RBI window with loans or bonds above $500 million, and the rupee holding recent levels without heavy central bank intervention. A reversal would come if global dollar funding costs rise or the RBI tightens the subsidy terms.
The next scheduled event is the bond issue, which IIFCL aims to complete before year-end. Srivastava did not give a precise date.
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