India’s bond market remains dominated by top-rated issuers, leaving mid-market firms with limited options. Nishant Kumar, Managing Director, Asia Investments at GuarantCo, and Head of Coverage – Asia at the Private Infrastructure Development Group (PIDG), believes credit enhancement could change that equation. Speaking to Nesil Staney at an NSE event, he outlines how GuarantCo and PIDG are helping deepen India’s sustainable debt markets. Excerpts:
How does your partnership with NSE fit into the Government of India’s push for credit enhancement?
Credit enhancement is crucial to developing India’s local debt capital markets. NSE, as one of the country’s largest exchanges, is a natural partner for us. Together, we aim to build an ecosystem where bonds can be credit-enhanced and subsequently listed on NSE’s platform.
A lot of bonds are being listed in GIFT City—especially foreign bonds. How is your focus different?
Correct. GIFT City has a strong listing pipeline, particularly for foreign bonds and offshore capital. Our focus, however, is on India’s mid-market companies, which often struggle to raise debt through capital markets. Over 95% of India’s $3 trillion debt market is dominated by government securities and top-rated issuers. We aim to help mid-market corporates access capital by improving their credit profile.
Nishant Kumar on the need for bond market competition
Banks already lend to these companies. Why push for bond market participation?
Mature financial systems rely on both banks and debt capital markets. India’s banking sector is robust, but its bond market remains shallow. Credit enhancement helps mitigate both perceived and actual credit risks, enabling issuers to tap institutional investors—such as mutual funds, insurers, and pension funds—that prefer higher-rated assets.
Who are your peers in the guarantee space?
Globally, entities such as CGIF in Southeast and North Asia—an ADB initiative—offer similar guarantees. In India, NAPFID has been mandated by the government to work on credit enhancement. But institutions dedicated exclusively to guarantees, like us, remain few.
Do you focus only on infrastructure?
Our mandate is sustainable infrastructure—broadly defined. It includes renewable energy, water and waste management, e-mobility, affordable housing, agri-logistics, cold storage, warehousing, and more. It’s a much wider scope than conventional infrastructure.
NBFCs are large bond issuers. Do you work with them?
Yes. In 2024, we closed transactions with Viveriti Capital and Muthoot Capital. We supported Muthoot in issuing a green bond listed on NSE. Our key criterion is that the end-use must align with sustainable infrastructure.
What fees do you charge for guarantees?
The RBI caps fees charged by offshore guarantors at 2% of the guarantee amount. Actual pricing depends on the transaction’s risk and the borrower’s credit profile.
Where are your underwriting teams based?
We operate as part of PIDG, which is funded by the governments of the UK, Sweden, Switzerland, Australia, the Netherlands, and Canada. While our headquarters is in London, our Asia business is run from Singapore and our Africa operations from Nairobi. Being offshore does not compromise underwriting quality or standards.
Nishant Kumar on Indian bond markets
How can India deepen its sustainable bond markets?
Credit enhancement plays a major role, especially for project bonds. India’s bond markets remain underdeveloped compared to its banking sector. By improving mid-tier corporate ratings to AA+ levels, we enable pension funds, insurance companies, and mutual funds to invest—unlocking long-term domestic capital.
What about preventing greenwashing in sustainable finance?
We enforce strict monitoring, reporting, and compliance for all guaranteed green bonds and loans. Our portfolio teams evaluate environmental, social, gender, and health & safety parameters. Trust is fundamental—misuse of proceeds risks damaging the entire ecosystem.
Do you collaborate with other multilateral agencies?
Yes. We work with BII, ADB, AIIB, FMO, Proparco, IFU, and others. We collaborate alongside—neither ahead of nor behind—other DFIs to manage risk effectively.
What’s the scale of your portfolio?
Globally, GuarantCo has underwritten $1.6 billion in guarantees across more than 60 transactions in 27 countries. PIDG as a whole has committed $5.6 billion since 2002 across 258 infrastructure projects.