NHAI to list green masala bonds on London Stock Exchange

The National Highways Authority of India (NHAI) needs to raise around Rs50,000 crore in the current fiscal to fund highway projects


The National Highways Authority of India (NHAI) plans to raise $750 million by selling the bonds. Photo: Ramesh Pathania/Mint
The National Highways Authority of India (NHAI) plans to raise $750 million by selling the bonds. Photo: Ramesh Pathania/Mint

New Delhi: The National Highways Authority of India (NHAI) is planning to raise $750 million by selling so-called green masala bonds and list the securities on the London Stock Exchange (LSE).

NHAI chairman Raghav Chandra on Wednesday held discussions with LSE CEO Nikhil Rathi and LSE Asia head Jasmine Arora in this regard, according to a senior highway ministry official, requesting anonymity.

“NHAI expects to raise anything between $500 and $750 million in the first tranche and the bonds will be floated in a month from now,” the official said.

Masala bonds are rupee-denominated instruments through which entities can raise funds from overseas investors without taking on the currency risk. “The term green masala bond has been coined to stress on NHAI’s priority on greening of highways and the detailed work plan will be ready soon,” the official said.

NHAI needs to raise around Rs.50,000 crore in the current fiscal year to fund highway projects. The road transport and highways ministry has decided to more than double the rate at which national highways are being built—from 16km a day to 41km a day in fiscal year 2016-17. This is around 2.5 times the current rate of construction.

Highways minister Nitin Gadkari had decided to award 25,000km of national highways in FY17 compared with 10,000km in the last fiscal year, and raised the construction target to 15,000km as against the 6,000km constructed last year. Out of this 25,000km highway award, 15,000km are under NHAI. Similarly, NHAI’s target for construction has been fixed at 8,000km for the current fiscal year. NHAI is already in negotiations with the Life Insurance Corporation of India to access long-term funds but the authority is yet to receive any response as a lot of infrastructure sector ministries are in the queue to access funds from the state-owned life insurer.

In September 2015, Reserve Bank of India issued guidelines allowing Indian corporates, non-banking financial companies, real estate investment and infrastructure investment trusts to sell masala bonds. Mortgage lender Housing Development Finance Corp. Ltd became the first Indian company to raise Rs.3,000 crore by selling masala bonds. In 2014, International Finance Corporation, a member of the World Bank group, had sold masala bonds to raise money for private sector infrastructure projects in India.

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