HYDERABAD: Indian infrastructure conglomerate GMR
group will launch the country's first long-term infrastructure bonds
issue next month to raise Rs 360 crore for its highway project through
credit enhancement scheme of the state-owned lender India Infrastructure
Finance Company Ltd (IIFCL), reports Economic Times.
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 it attract long-term funds from insurance companies and pension funds, said IIFCL chairman and managing director SK Goel.
Talking to reporters in Hyderabad on Friday, Goel said GMR was the first among the four credit enhancement schemes that IIFCL is taking up on a pilot basis to channelise long-term funds towards a robust long-term bonds market in the country.
The other three 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, he said.
GMR Highways managing director O Bangaru Raju told ET that their road SPV - GMR Jadcherla Expressways - that became operational in February 2009, will now retire high-cost debt of banks with low-cost and fixed rate long-term infrastructure bonds.
"The bonds issue also helps us reduce the interest burden as the long-term infrastructure bonds carry fixed rate of around 100 basis points below the bank lending," he said.
GMR had arranged funds for its Farukhnagar-Jadcherala road project on National Highway 7 during August 2006. Of the total cost of Rs 471 crore, ICICI Bank led bankers' consortium extended Rs 353 crore of debt, while the balance Rs 118 crore was pumped in as equity by the developer
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 it attract long-term funds from insurance companies and pension funds, said IIFCL chairman and managing director SK Goel.
Talking to reporters in Hyderabad on Friday, Goel said GMR was the first among the four credit enhancement schemes that IIFCL is taking up on a pilot basis to channelise long-term funds towards a robust long-term bonds market in the country.
The other three 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, he said.
GMR Highways managing director O Bangaru Raju told ET that their road SPV - GMR Jadcherla Expressways - that became operational in February 2009, will now retire high-cost debt of banks with low-cost and fixed rate long-term infrastructure bonds.
"The bonds issue also helps us reduce the interest burden as the long-term infrastructure bonds carry fixed rate of around 100 basis points below the bank lending," he said.
GMR had arranged funds for its Farukhnagar-Jadcherala road project on National Highway 7 during August 2006. Of the total cost of Rs 471 crore, ICICI Bank led bankers' consortium extended Rs 353 crore of debt, while the balance Rs 118 crore was pumped in as equity by the developer
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