IL&FS plans bond issue to refinance Rs6,000 crore debt
Mumbai: Infrastructure Leasing and Financial Services Ltd (IL&FS) plans to hit the domestic bond market to refinance almost Rs6,000 crore (about $940 million) of debt, said a senior executive.
The debt was taken to finance the 9.2km Chenani-Nashri project in Jammu and Kashmir—the country’s longest road tunnel.
Overall, IL&FS plans to refinance debt to the tune of Rs15,000 crore this financial year, said Ramesh C. Bawa, managing director and chief executive at IL&FS Financial Services Ltd. The refinancing plan envisages tapping alternative sources including green bonds and infrastructure investment trusts (InvITs) and rupee-denominated overseas loans. Green bonds are sold to fund environment-friendly businesses or assets.
Last year, IL&FS refinanced debt worth Rs5,300 crore for its various assets such as roads and wind energy projects.
According to IL&FS’s annual report for the year 2015-16, the group had consolidated long-term borrowings of Rs54,665.1 crore and interest outgo of Rs5,497.9 crore.
The tunnel on the Jammu-Srinagar highway connects Chenani in Udhampur district with Nashri in Ramban district, reducing the travel distance from 41km to 10.9km. Construction on the National Highways Authority of India (NHAI) annuity project was started by IL&FS Transportation Networks Ltd, the roads arm of the group, in 2011 and the project was completed earlier this year.
“The project will generate its first annuity payment in September/October and post that we will start work on refinancing the almost Rs6,000 crore debt on the books of the asset,” said Bawa.
IL&FS already has elicited strong interest from existing lenders to refinance the debt, but the group will most likely look at the domestic bond market as it has been focusing strongly on diversifying its funding sources, Bawa said.
“We expect to be able to close this refinancing by end of December or January. This is part of our plan to refinance almost Rs15,000 crore of debt this financial year,” he added.
IL&FS is also planning to refinance the debt of its wind energy business through the green bond route and plans to hit the market soon with the offshore bond offering.
“We are planning to hit the offshore debt markets for refinancing the debt of our wind energy business sometime in October. The proposed size of the green bonds offer is around $470 million. We have been working with a few banks on the preparations and hope to go to market in October,” said Bawa. Last year the group refinanced the debt of one of the special purpose vehicles (SPVs) under the wind energy business in the domestic market.
Several Indian renewable energy firms this year have tapped the offshore market to refinance debt through green bonds. These include ReNew Power Ventures Pvt. Ltd and Greenko Group, which collectively raised close to $1.5 billion.
Another alternative fund-raising route that the group has been exploring for its roads assets business is the InvIT. Though the plan has been in the works for sometime now, the group is yet to launch its InvIT.
“Given our high credit rating we have been able to do a lot of refinancing in the domestic market through banks or domestic bonds. While we continue to work on an InvIT, for us the InvIT is one more option in our overall refinancing plan to raise capital and not the primary tool that we are looking at,” said Bawa.