The International Finance Corporation (IFC) has launched a $2.5 billion rupee-denominated financing program to support infrastructure development in India, the institution announced in a statement on Wednesday.
Under the program, the World Bank's private sector arm will use a combination of rupee-denominated bonds and swaps to raise local-currency financing of up to $2.5 billion over the next five years, it said.
Proceeds from the program will be used for infrastructure investments in India.
“Bonds offered under IFC’s rupee financing program offer a safe investment alternative for domestic pension funds and other investors, while mobilising capital to address India’s infrastructure needs,” said Jin-Yong Cai, IFC executive vice president and chief executive.
The issuance of onshore bonds by IFC will deepen the domestic bond market and provide much-needed finance to infrastructure, added Dr. Arvind Mayaram, Finance Secretary and Secretary, Department of Economic Affairs, India’s Ministry of Finance.
Last year, IFC issued a $1 billion offshore global bond program linked to the rupee exchange rate. Under the program, IFC offered six separate issuances between November 2013 and April 2014 – four with maturities of three years, one of five years, and the final tranche of seven years.
This set a benchmark for different tenors in the markets and extended the offshore rupee yield curve from less than three years to seven. The bonds attracted a broad range of international investors, IFC said in the statement.
Over the fiscal year of 2014, IFC invested $1.2 billion in India to provide counter-cyclical support to infrastructure, promote financial inclusion and enhance access to quality, affordable healthcare.