Bond Program to Finance Infrastructure

IFC's $2.5 billion-equivalent onshore rupee bond program will finance infrastructure projects at a time when India has made infrastructure a development top priority.

Backed by India's Ministry of Finance, central bank, insurance, and pension funds regulators, the program builds confidence in India's growth and reform agenda.

Launched in late 2014, the onshore program marks another milestone in deepening the country's capital markets and opening up bond markets, in addition to boosting the infrastructure sector. With a portfolio of $4.7 billion, IFC's highest exposure is in India. IFC’s strategic priorities in the country seek to provide counter-cyclical support to infrastructure, promote financial inclusion and enhance access to quality and affordable healthcare to the underserved.

Addressing Gaps

Expanding access to essential infrastructure services is crucial to reviving and sustaining a robust growth momentum. Strong economies need efficient transport, sanitation, energy and communications systems to prosper and share the benefits of prosperity widely. 

With this program, IFC will be able to use a combination of rupee-denominated bonds and swaps to raise local currency financing over the next five years to invest in much-needed infrastructure projects in India.

Estimates show India needs $1 trillion financing to improve infrastructure. This will mean that infrastructure projects, that typically have a long gestation, will require crowding in from all possible funding sources—deep bond markets can facilitate channeling finances from diverse sources including foreign investors. IFC’s triple A rated rupee bonds will be priced close to government securities and can have maturity periods of one to 30 years. The bonds will primarily target institutional investors including insurance companies and pension funds.

The onshore rupee-financing program built on a successfully concluded $1 billion offshore rupee bond program, the first time rupee-denominated debt had been issued offshore to invest within India. IFC's offshore issuances brought international investors to India at a time of continuing economic uncertainty, created a pricing benchmark and extended the yield curve in the offshore rupee markets, setting a benchmark for other potential issuers.