News
NaBFID Offers First-Ever Short-Term Bond Issue
In a strategic move to diversify its funding profile, the National Bank for Financing Infrastructure and Development (NaBFID), undertook its first short-term bond issuance on April 7, 2025, with a targeted fundraising of Rs. 8,000 crores. This marks a significant development, as the infrastructure lender, for the first time, offered five-year maturity bonds alongside its regular long-tenure offerings.
Diversification Bond Tenor for Strategic Flexibility
The offer comprised two distinct tranches:
- Five-year bonds: Base issue size of ₹1,000 crore with greenshoe option of an additional ₹2,000 crore; and
- Ten-year bonds: Base issue size of ₹2,000 crore with a greenshoe option of ₹3,000 crore.
The bonds have received ‘AAA’ rating from both ICRA and CRISIL, indicating the highest degree of safety regarding timely servicing of financial obligations. This rating, coupled with favourable market conditions, was expected to attract broader participation from institutional investors. NaBFID also invited coupon and commitment bids from bankers and institutional investors, which are expected to see strong demand.
The move also comes just ahead of the Reserve Bank of India’s (RBI) monetary policy announcement due on April 9, 2025, where a 25-basis point cut is widely expected. The move also comes amid a favourable liquidity environment and declining bond yields, factors that experts believe have prompted NaBFID to test shorter-duration funding routes.
Market analysts suggest that NaBFID’s decision to test the shorter end of the curve reflects a nuanced understanding of the interest rate cycle. This move signals NaBFID’s attentiveness to market cues and its proactive approach to financial planning. By diversifying its borrowing instruments, the institution can strike a balance between cost efficiency and long-term stability.
Over the last two financial years, the bank has approximately raised ₹36,400 crores through bonds with maturities ranging from 10 to 20 years. This includes ₹16,900 crore raised in FY 2024–25 and ₹19,500 crore in FY 2023–24.
The upcoming issue will mark the sixth since its operationalization and signifies a more dynamic borrowing approach aimed at balancing its asset-liability framework.
By strategically leveraging market conditions while maintaining its long-term infrastructure financing mandate, NaBFID continues to establish itself as a cornerstone in India’s economic development architecture. The upcoming bond issue not only augments its financial capacity but also reflects a well-considered alignment with broader economic indicators and investor sentiment, positioning the institution for sustained growth and impact
