NaBFID plans up to $4 billion in overseas borrowing under RBI hedging window

The National Bank for Financing Infrastructure and Development (NaBFID) plans to raise $3-4 billion through external commercial borrowings (ECBs), following a Reserve Bank of India (RBI) move to offer a concessional hedging window for overseas borrowing.

NaBFID had previously planned to raise $1-2 billion through the ECB route. The revised target follows the RBI’s introduction of a concessional forex swap facility for ECBs raised by public sector undertakings and banks.

“We are looking at about $3-4 billion of ECBs, including both loans and bonds. There is a plan,” managing director Rajkiran Rai G said on the sidelines of the #FIBAC 2026 conference in Mumbai on Wednesday.

Mint had reported on 25 March that NaBFID planned to raise $1-2 billion through the ECB route.

The RBI, in its monetary policy statement on 5 June, said it would provide the concessional forex swap facility until 31 December 2026 for ECBs with a maximum five-year tenure. Under the scheme, the central bank will effectively bear a fixed swap cost of 1.5% a year for hedging dollar exposure, lowering the overall cost of overseas borrowing.

Building the war chest

NaBFID has raised $850 million under the scheme through a term loan last month at secured overnight financing rate (SOFR) plus 120 basis points, Rai said. SOFR, a measure of the cost of overnight borrowing backed by Treasury securities, was at 3.64%.

The lender is now planning a $500 million-$1 billion bond issue, depending on investor appetite. The issue could be launched by the end of September and is likely to have a maturity of around 10 years.

“We are looking at slightly longer, not five years, maybe ideally something around 10-year,” Rai said, adding that the amount had not yet been crystallised but would be a minimum $500 million.

The bond issue is part of NaBFID’s broader $3-4 billion ECB programme. The lender is also working on a roughly $1 billion long-term ECB loan backed by a multilateral agency. The transaction, expected to have a 10-15 year tenor, could materialize once necessary approval is obtained in September. Rai expects the transaction to be completed by October.

As of end of June, NaBFID had borrowings of ₹1.2 trillion, of which 50% came from non-convertible debentures, 42% from bank lines, 6% from certificates of deposit and 1% each from ECBs and commercial paper.

Rai said overseas borrowing costs had risen following the RBI's announcement of the hedging window but remained reasonable.

Since the US-Iran war broke out on 28 February, the yield on the 10-year US Treasury benchmark has risen 65 basis points to 4.68%, while the corresponding domestic government bond yield has increased 10 basis points to 6.78% as of 11 August, Bloomberg data showed.

Dollar debt gets harder

NaBFID is also helping infrastructure companies refinance dollar-denominated debt with rupee funding, as adverse currency movements have made foreign-currency liabilities more expensive.

“Companies are finding it easier to raise rupee credit rather than dollar credit. So many of them are refinancing the dollar debt by way of rupee. We are helping them,” Rai said.

NaBFID has developed a restricted-group structure for such refinancing, pooling cash flows from multiple special purpose vehicles to improve the borrower's credit rating and lower its funding cost, Rai said.

Meanwhile, the proposed self-regulatory organization (SRO) for infrastructure lenders could become operational within another month, Rai said. The body is expected to bring together infrastructure-focused lenders and represent sectoral issues before regulators and the government.

The SRO could initially have around 15 members and expand subsequently.

NaBFID is also moving ahead with an alternative investment fund (AIF) subsidiary in GIFT City, targeting a $500 million pure-equity fund. Operations are tentatively expected to begin by December or by the end of FY27.

“We are in the process of building a team there,” Rai said. The lender has secured premises in GIFT City and is working through the remaining regulatory and organizational processes.

Mint reported on 25 March that India's youngest infrastructure financier planned to diversify into equity financing and blended debt.

AIFs are pooled investment vehicles that raise capital from investors to invest in assets such as infrastructure, private equity or startups.