India's IIFCL plans $1 billion loan; in talks for $400 million ADB funding

MUMBAI: India Infrastructure Finance Company (IIFCL) is planning to borrow $1 billion from overseas investors, which could be its biggest foreign-currency loan, while also exploring a separate $400 million funding from the Asian Development Bank, an executive said.

The Indian company is the latest to tap into the foreign lending market after the Reserve Bank of India introduced a series of measures to boost dollar inflows and support the rupee. The measures include allowing state-run firms and banks to raise foreign currency funds to hedge their forex exposure at a subsidised rate.

The $1 billion loan will be for 15 years at an interest rate of under 7%, and the company is talking to the Asian Development Bank for a separate 20-year loan of roughly $400 million, Palash Srivastava, IIFCL deputy managing director, told Reuters on Monday.

IIFL doubled the 15-year loan’s size to $1 billion from an initial $500 million after the RBI’s incentive, he added. Reuters has previously reported that three Indian development finance institutions plan to raise at least $1.5 billion through foreign-currency bank loans under the RBI facility.

Some Indian banks poised for interest margin gains as short-term funding costs fall

Further, IIFCL is weighing a debut dollar bond of around $100 million by year-end, Srivastava said.

“The bond will likely be in the three- to five-year tenor,” he added.

Dollar borrowings have picked up following the opening of the RBI’s subsidised borrowing window.

HDFC Bank raised $750 million via a five-year bond, while Axis Bank priced $800 million through a dual-tranche dollar bond sale. State-run Power Finance Corp raised $300 million via dollar bonds.

State Bank of India and Bank of Baroda are also planning overseas fundraising.