India’s government-owned IIFCL infuses $43.5Mn in non-convertible debt

Indian Infrastructure Finance Company, dubbed IIFCL, has announced its entry into the long-term infrastructure bond market after appending to Virescent Renewable Energy Trust (VRET) – a infrastructure investment trust (InvIT) authorized non-convertible dues.

Speaking on the recent investment, PR Jaishankar, Managing Director of IIFCL, mentioned of the total volume of issue worth $87 million, the infrastructure lender is infusing $43.5 million, as a part of its goal to boost long-term infrastructure debt market in India.

Building upon its bigger target, IIFCL has marked its first e-bid via VRET in the field of non-convertible debt securities this year.

With a 10-year tenure, the bond is introducing a coupon worth 7.9%, allowing annualized yield of 8.2%, claims the IIFCL managing director.

While the primary objective of the investment will be to enhance asset quality of IIFCL, it will also additionally increase the existing number of long-tenor debt finance options available for infrastructure projects.

With this, a new ecosystem fostering long-term finance infrastructure, notably driven by the bond market will be created.

Mr. PR Jaishankar commented agreeing with the potential aid of the recent infusion in improving IIFCL’s asset quality and added that, with consistently dropping non-performing assets of the company, the primary aim is to maintain a robust balance sheet to serve the basic need of infra finance market.

Ever since its inception in 2006, the government-owned infrastructure lender has offered long-term capital assistance to several feasible infrastructure projects in the country.

Until 2021, IIFCL’s aggregate consolidated sanctions mounted to INR 2.12 lakh crore and disbursements worth INR 1.04 lakh crore.

It has been reported that the provision coverage ratio (PCR) of the company escalated to 67.69% in December 2021, noting approximately 8% rise from the previous year’s 59%.

Further, the company was also able to control the reducing asset quality trends associated with its NPAs at 4.3% at the end of 2021 as compared to 8.16% during the same time a year prior.

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