The International Finance Corporation (IFC), the World Bank’s private-sector financing arm, has announced that bonds worth $2.5bn will be used to fund infrastructure projects in India over the next five years.
IFC CEO Jin-Yong Cai said in a statement that the bonds would "offer a safe investment alternative for domestic pension funds and other investors, while mobilizing capital to address India’s infrastructure needs."
HSBC, ICICI Securities Primary Dealership and SBI Capital Markets have all been hired as arrangers by the IFC.
The Reserve Bank of India has recently relaxed rules for lenders to sell bonds to help boost funding for infrastructure and affordable housing in the country.
The IFC raised $1bn in offshore bonds for infrastructure earlier this year.
Arvind Mayaram (pictured), India’s economic affairs secretary, said funding will also create a new momentum in the development of the corporate and long-term bond markets. "It will create a yield curve, which can then be followed by others. All of these (bonds) together would provide lot of liquidity in areas where liquidity has been a problem."
According to a global competitiveness report India’s infrastructure is listed 85th out of 148 countries.
A boost in infrastructure spending is expected following the landslide election of Narendra Modi in May this year. France is also considering lending India $1.4bn for infrastructure.