India Infrastructure Finance Company Limited on Tuesday emphasised the need to come out with longer tenure debt options for infrastructure projects ensuring financial viability while also strengthening the bond market.

V.Venkata Ramana, Director of IIFCL, said that the country and infrastructure sector requires longer term finance extending to the economic life of the projects.

Speaking at the Ficci Finsec 2014, Venkata Ramana said, “IIFCL can lend for longer tenures, longer than other consortium members and remain as sole lender in case of public private partnership projects under direct lending and take out finance.”

He said IIFCL in association with the Asian Development Bank is working on credit enhancement scheme on pilot basis for enabling infrastructure projects to tap capital markets. This would also be facilitate corporate bond market in the country.

Under this initiative, IIFCL has sanctioned in principle four projects out of which guarantee agreement has been signed in the first private transaction for bond issue by NHAI four road projects promoted by the GMR Group.

He said that the current scenario in the country demands innovative ways to finance infrastructure projects wherein the long term lending approach will ensure project viability and also improve repayment.

Referring to their engagement with PPP projects, he said that they were already associated with some of the metro projects in the country and expects to close some more deals extending finance.

Manish Gupta, Director of Ratings at Crisil, said Investors need to come to the bond market, which is a good option for the infrastructure sector. However, he felt that it is not deep enough to fully realise its potential. The infrastructure sector in the country is beset with problems of fuel linkages, poor financial health of discoms, all adding to the power sector concerns.

He said take out finance and partial guarantee will improve credit quality. The bond market needs better risk management.

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