Retirement fund body EPFO and the Life Insurance Corporation have decided to invest in NHAI bonds that the highway regulator plans for road projects, a top official today said.
“Both the Employees Provident Fund Organisation (EPFO) and the Life Insurance Corporation (LIC) have in-principle agreed to invest in our bonds. NHAI has raised Rs 5,000 crore by selling bonds to EPFO and rates are being negotiated for further sale,” NHAI Chairman Raghav Chandra told PTI.
The Rs 5,000-crore bond sale to EPFO is part of the fund-raising plan of NHAI for highway projects. “EPFO has invested in NHAI bonds under the PSU category,” Chandra said.
The authority has plans to raise at least Rs 50,000 crore in 2016-17 to meet its requirement of funds for highway projects.
The chairman said while rates are being discussed with EPFO for further sale of bonds worth about Rs 10,000 crore, LIC too in-principle has agreed to invest in the bonds and will take up the issue at its board meeting by the end of the month.
On NHAI’s plan to raise up to USD 750 million through green masala bonds to be listed on the London Stock Exchange soon, the chairman said the strategy is being finalised.
Last month, after meeting London Stock Exchange CEO Nikhi Rathi and Asia Head Jasmine Arora, Chandra had said, “We plan to float what we say green masala bond in a month and aim to raise between USD 500-750 million in the first tranche.
The offering is named so as the stress is on greening of highways besides other such programmes.
According to the NHAI chief, there is a huge appetite for masala bonds and the proceeds can be utilised to further accelerate the highway building pace.
Masala bonds are named after famous Indian spices and are instruments through which Indian entities can raise funds by accessing overseas capital markets while bond investors hold the currency risk. NHAI needs to raise about Rs 50,000 crore this year from the market to fund projects.
The Road Transport and Highways Ministry has set an ambitious target of building 15,000 km of roads and award projects for another 25,000 km in the current financial year, about two-and-a-half times higher than last year’s.
Masala bonds were issued initially by the International Finance Corporation (IFC), a member of the World Bank group, in 2014 to raise money for private sector infrastructure projects in India.
These masala bonds are listed on the international market, and offered and settled in US dollars, providing easier access to foreign investors.