{"id":166040,"date":"2025-09-28T11:08:15","date_gmt":"2025-09-28T11:08:15","guid":{"rendered":"https:\/\/quixnet.net\/wpinstance\/nabfid-world-bank-adb-team-up-on-1-billion-credit-boost-for-infrastructure-bonds-today-news-mint\/"},"modified":"2025-09-28T11:08:15","modified_gmt":"2025-09-28T11:08:15","slug":"nabfid-world-bank-adb-team-up-on-1-billion-credit-boost-for-infrastructure-bonds-today-news-mint","status":"publish","type":"post","link":"https:\/\/quixnet.net\/wpinstance\/nabfid-world-bank-adb-team-up-on-1-billion-credit-boost-for-infrastructure-bonds-today-news-mint\/","title":{"rendered":"NaBFID, World Bank, ADB team up on $1 billion credit-boost for infrastructure bonds | Today News – Mint"},"content":{"rendered":"

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NEW DELHI: The National Bank for Financing Infrastructure and Development (NaBFID) is collaborating with the World Bank and the Asian Development Bank (ADB) on a $1 billion risk-sharing facility to introduce credit enhancement products, two people familiar with the matter told Mint<\/i>.
The proposed backstop arrangement will allow NaBFID to provide partial credit guarantees, helping infrastructure firms, primarily those with \u2018BBB\u2019 to \u2018A\u2019 credit ratings, enhance their credit profiles, lower borrowing costs, and access the bond market on more favourable terms, they said.
Typically, an \u2018A\u2019 rating signifies high credit quality and low default risk, while \u2018BBB\u2019 indicates medium credit quality with moderate default risk.
The market opportunity for credit-enhanced bonds is estimated at around \u20b9<\/span>5 trillion, with NaBFID eyeing potential exposure of up to \u20b9<\/span>75,000 crore over the next two years, the two people, who spoke on the condition of anonymity, added.
\u201cNaBFID has a commitment of about $1 billion from multilateral agencies. With the backstop of such agencies, the agency\u2019s capacity to roll out credit enhancement products has expanded significantly, as without it, the Reserve Bank of India (RBI)<\/a> caps investments at 20%,” one of the persons cited earlier said.
For context, the RBI limits total investment by all regulated entities to 20% of an alternative investment fund (AIF)<\/a> scheme\u2019s corpus, with no single entity allowed to exceed 10%.
\u201cThe plan is to kickstart the process by launching the credit enhancement product and demonstrating its viability. Once the market accepts it, other regulated entities can step in. Individually, an organization like NaBFID\u2019s capacity is limited, but collectively, this can scale,” the person said.
\u201cNaBFID expects to build exposure of \u20b9<\/span>40,000 crore to \u20b9<\/span>50,000 crore in the first two years. The potential market is vast, at least \u20b9<\/span>5 lakh crore (trillion) worth of bonds could be credit-enhanced, creating significant opportunities for issuances,” this person added.
On 9 March, Mint <\/i>reported that NaBFID is in advanced talks with multilateral agencies<\/a> to help reduce the cost of financing infrastructure projects in India.
The report stated that NaBFID, along with multilateral agencies, will share credit risk to enhance corporate bond ratings and leverage credit enhancement facilities, improving creditworthiness and reducing borrowing costs for infrastructure companies. <\/p>\n

Bridging the financing gap<\/h2>\n

India is intensifying efforts to bridge an infrastructure financing gap exceeding 5% of GDP as it works toward its goal of becoming a $30 trillion economy by 2047.
While public investment has accelerated, private capital remains underutilized, with insurance and pension funds allocating barely 6% of their portfolios to infrastructure.
Partnering with multilateral agencies like the World Bank and ADB will strengthen NaBFID by easing its capital requirements for partial credit enhancement (PCE), the other person cited earlier said.
\u201cThis will enable the institution to back a larger volume of bonds at lower guarantee fees, encouraging more corporates to tap the product,” the person said.
High capital requirements and long project timelines typically deter traditional lenders, widening the infrastructure financing gap. Strengthening the corporate bond market is crucial to unlocking funds, but elevated borrowing costs have often discouraged investors.
\u201cNaBFID\u2019s PCE facility will change this by improving bond ratings and making corporate bonds a viable funding option for infrastructure,” the second person added.
Credit enhancement allows lenders to offer guarantees that improve corporate bond ratings, enabling issuers to access the bond market on more favorable terms. The capital that lenders must set aside for such guarantees depends on the underlying bond\u2019s rating.
Spokespersons from the World Bank, the ADB, and the ministry of finance did not respond to emailed queries.
When contacted, Rajkiran Rai, NaBFID MD, said his organization has a commitment from multilateral agencies\u2019 risk-sharing facility to introduce credit enhancement products.
He did not elaborate on the names of the multilateral agencies involved but added: \u201cSome of the multilateral agencies have decided to work together with us.”
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This is a Mint Premium article gifted to you. Subscribe to enjoy similar stories. NEW DELHI: The National Bank for Financing Infrastructure and Development (NaBFID) is collaborating with the World Bank and the Asian Development Bank (ADB) on a $1 billion risk-sharing facility to introduce credit enhancement products, two people familiar with the matter told […]<\/p>\n","protected":false},"author":1,"featured_media":166041,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[10],"tags":[],"class_list":["post-166040","post","type-post","status-publish","format-standard","has-post-thumbnail","category-world","entry"],"_links":{"self":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/posts\/166040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/comments?post=166040"}],"version-history":[{"count":0,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/posts\/166040\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/media\/166041"}],"wp:attachment":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/media?parent=166040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/categories?post=166040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/tags?post=166040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}