IIFCL may float long-term bonds

NEW DELHI: Public sector India Infrastructure Finance Company (IIFCL) is considering issue of longer tenor bonds of above 10 years. The company has already got the approval to issue 10-year bonds for Rs 5,000 crore in this fiscal. But company officials said they will not issue the entire lot at one go. They said while they were satisfied with the present tenor, they could explore longer-term paper, if the interest rates were reasonable.

The company hopes to price its current debt offering in the range of 8.70%. IIFCL has signed an memorandum of understanding with Infrastructure Leasing & Financial Services. The MoU will provide a shelf of projects in various infrastructure sectors for IIFCL to finance.

Vinod Rai, secretary, financial sectors, in the finance ministry, said the chief grouse of the infrastructure sector was the lack of long-term funds to provide money for the projects. He said with the establishment of IIFCL in January ’06, with a government guarantee to raise Rs 10,000 crore that issue has been largely taken care of.

He also said the MoU has brought together two powerful organisations to develop synergy in the infrastructure sector. SS Kohli, chairman, IIFCL, said his company is exploring large number of projects to provide debt and equity finance to push ahead with the infrastructure development in the economy. IIFCL has already signed MoUs with three public sector banks — OBC, Corporation Bank and Indian Bank, to access low-cost finance for funding projects.

Chairman of IL&FS, Ravi Parthasarathy said such framework agreements were the backbone to provide competitive finance for infrastructure projects. He said the company has used this model to finance several projects including those in the power sector.