The Hindu Business Line : WBIDFC set to close bonds issue with Rs 1,000-cr mop-up

THE West Bengal Infrastructure Development Finance Corporation (WBIDFC) is set to close its on-going issue of bonds with a collection of Rs 1,000 crore. The proceeds, which will be used to support a clutch of infrastructure projects taken up by the State Government, will enable WBIDFC to retire high-cost debt that it had taken previously.

The Corporation, which has so far raised about Rs 925 crore, has mobilised the funds chiefly from banks and PFs. Among the factors that have prompted these investors is the fact that the issue has been rated by two credit rating agencies. Its previous efforts to raise resources were rated only by CARE; this time, Fitch has also done an assessment.

As much as Rs 500 crore has come from banks in the early stages of the offer. The rest is made up of inflows generated by PFs and other institutions. Dual rating, which provides an additional degree of comfort to the investor community, has made its case stronger, it is felt. Both ratings, incidentally, are in the `A (SO)' category.

The latest move will help the Corporation to modify its debt repayment obligation, maintained Mr N.K. Maity, Managing Director, adding that the issue will be a relatively low-cost affair. "We hope to retire an earlier debt, taken at 13.25 per cent. This is part of an on-going exercise," he said.

WBIDFC, it may be mentioned, has lately seen a progressive reduction of its average cost of funds, which now stands at about eight per cent. This represents a shift from the 13 per cent or so that was evident not very long ago, a fall-out of the changing interest rate regime.

While Rs 75 crore is yet to be raised, the Corporation has received positive feelers from at least one major institutional player, which is said to be interested in investing a large amount. The issue, if the matter is sorted out, may well be closed for subscription within a few days, Mr Maity mentioned.

The West Bengal Government has made it clear that it will require WBIDFC to deploy roughly Rs 1,000 crore this fiscal. There has been a gradual reduction in the Government's direct requirement in recent years. The Corporation, in turn, has been able to leverage its position in the market and even rake in a profit, it is pointed out.

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