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IIFCL forays into long-term infra bond market; invests Rs 325 cr in NCD of VRET

This marks IIFCL’s first transaction under this initiative, the company said in a statement on Sunday.

India Infrastructure Finance Company Ltd (IIFCL) on Sunday said it has forayed into the long-term infrastructure bond market by subscribing to a non-convertible debt issued by Virescent Renewable Energy Trust (VRET), an infrastructure investment trust (InvIT).

The total size of the issue was Rs 650 crore and IIFCL has invested Rs 325 crore in it, the infrastructure lender’s Managing Director P R Jaishankar said.

“IIFCL in its endeavour to promote long-term infrastructure debt market in India has participated in the issue of non-convertible debt securities amounting to Rs 325 crore by placing its first e-bid in the issue of VRET on February 4, 2022,” the lender said in a release.

The bond, which has a tenure of 10 years, is offering a coupon of 7.9 per cent with an annualised yield of 8.2 per cent, Jaishankar said.

“The investments in the bond is towards developing a long-term bond market and helping the long-term financial assistance for InvITs,” Jaishankar told PTI.

It would not only lead to further improvement in IIFCL’s asset quality, but also boost the availability of longer-tenor debt finance for infrastructure projects, thereby creating an environment that promotes long-term financing for the infrastructure sector, especially through bond markets, the release said.

“This is a step in the direction of improvement of our asset quality. Our NPA has substantially reduced. Overall effort is to ensure that we have a very strong balance sheet and fundamentals to cater to needs of the infrastructure finance market,” Jaishankar said.

IIFCL is a government-owned infrastructure lender which provides long-term financial assistance to viable infrastructure projects in the country.

As of December 2021, the lender’s cumulative consolidated sanctions and disbursements stood at Rs 2.12 lakh crore and Rs 1.04 lakh crore respectively.

In FY21, the company recorded its highest ever sanctions and disbursements at Rs 20,892 crore and Rs 9,460 crore, respectively on a standalone basis.

It posted a standalone profit after tax (PAT) of Rs 286 crore and consolidated PAT of Rs 325 crore in FY21. In the nine-month ended December 2021, its standalone PAT increased to Rs 528 crore, up 45 per cent y-o-y.

The company’s provision coverage ratio (PCR) increased to 67.69 per cent as of December 2021 (up from around 59 per cent as on December 2020).

It was able to arrest the declining asset quality trends and achieve a reduction in its net NPAs to 4.36 per cent as of December 2021 as compared to 8.16 per cent as of December 2020.

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