The National Highways Authority of India (NHAI) has raised ₹5,000 crore from retirement fund body, EPFO, NHAI sources told BusinessLine.
Overall, NHAI plans to raise₹20,000 crore of taxable bonds from the Employee Provident Fund Organisation (EPFO) in the current fiscal, of which the first tranche of ₹5,000 crore in taxable bonds was raised on August 3. The highway authority expects a similar round of funding in the next few months, said sources in the know.
NHAI has a budgeted target of raising ₹55,000 crore this year. “We are in talks with both EPFO and LIC. The latter has to revert back as their investment committee has not met,” NHAI Chairman Raghav Chandra told BusinessLine. The cost of borrowing is floating and linked to the 25-year G-securities rates.
The coupon levels will be at 8.03 per cent, with a bullet repayment mechanism, which basically means NHAI will have to pay the interest every year for 25-years, with the entire principal to be repaid at the end of the 25 years. The funds were raised through the private placement route.
The amount raised will be deployed by NHAI for implementing its projects. NHAI plans to implement 30,000 km of roads over the next three years through expressways and build-operate-transfer mode of project implementation. The 10-year G-securities bonds are trading at about 7 per cent now.
NHAI has raised this funding based on its AAA ratings by four credit rating agencies.
Sources said the funding was not linked to any specific project. Rating each infrastructure project is difficult as most of the projects are implemented on a special purpose vehicle basis. In case of project-specific funding, each Special Purpose Vehicle is a new project, which has to be operational for a minimum number of years to be rated.
Thus, NHAI, which has a sovereign guarantee, has raised funds at a lower cost.
NHAI has been looking for long-term funds for quite some time, a tenure for which there are a few buyers such as EPFO and LIC.
For NHAI, this could be the first 25-year taxable bond paper. Earlier, NHAI had issued 10-year, 15-year, 20-year tax-free bonds. In the past, Indian Railway Finance Corporation is probably the only other government agency to have done so.