MUMBAI: The National Highway Authority of India (NHAI) is set to raise up to Rs 10,000 crore in its maiden public issue of taxable bonds for retail investors, the proceeds of which will be used to finance the ambitious Bharatmala Project.
The much-awaited sale is likely to open for subscription in the next two weeks, with NHAI filing the offer document for approvals ahead of listing the instruments on the stock exchanges.
Bonds may offer 8.50-9% interest across various tenors, including 3-5-10 year maturities. Final terms are yet to be decided, three people familiar with the matter told ET.
To be sure, NHAI has already sold Rs 29,000 crore of bonds to top institutional investors, such as the LIC of India and the State Bank of India, at an average coupon rate of around 8% in FY19, dealers said.
“The company may raise the money in one or more tranches depending on the interest cost,” said one of the persons cited above. NHAI could not be contacted immediately for its comments.
NHAI has appointed five investment banks, including AK Capital, Axis Bank, Edelweiss and Trust Capital, to help with the sale.
Rating companies have rated NHAI triple-A.
The issue is a part of NHAIs overall Rs 62,000-crore debt raising plan for this financial year. Proceeds will be used to construct roadways across the country. It is also said to have planned the sale of rupee-denominated masala bonds to overseas investors. NHAI raised about Rs 52,000 crore during 2017-18.
The government launched the Bharatmala project last October. The programme envisages developing about 60,000 kilometres of new national highways, with a capital expenditure of Rs 6.92 lakh crore.
“NHAI bonds will be treated like quasi-sovereign bonds, which is key to attracting investors,” said Ajay Manglunia, Executive Vice President at Edelweiss Financial Services. “Its an opportunity for the retail pool of investors to participate in infrastructure building and get better returns over bank fixed deposits without any credit risk.”
Union minister for road transport and highways, Nitin Gadkari, has said that the ministry plans to award half the projects in phase one by December this year.
More than five years ago, NHAI had started its tax-free bonds offering to retail investors via public issues.
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