World Bank arm to raise $2.5 bln in India bond sale

The World Bank's private sector financing arm said Wednesday it would raise $2.5 billion in Indian rupee-denominated bonds to fund much-needed infrastructure projects across the country. The debt sale by the International Finance Corporation (IFC), the largest global development institution focused on the private sector, marks one of India's biggest-ever financing offers. The proceeds of the bond sale will be used to help finance India's ambitious infrastructure programme to overhaul its shabby roads, ports and airports among other projects. India requires big investment to carry out the planned infrastructure programme, expected to cost around $1 trillion in the five years to 2017. But a shallow bond market and lack of other longterm financing have hampered efforts to raise the necessary money. Leading Indian financial daily, The Economic Times, called the bumper debt sale a "vote of confidence in the Indian economy" under the country's new right-wing premier Narendra Modi. The IFC will use a combination of bonds and swaps -- a trade of one financial instrument for another -- to raise up to $2.5 billion (150 billion rupees) in local currency financing over the next five years. The offer "will deepen the bond market and also provide much-needed finance to infrastructure projects", India's Finance Secretary Arvind Mayaram said in a statement. Last year, the Washington-based IFC raised $1 billion through the issue of overseas rupee-linked bonds to fund infrastructure projects, drawing a broad range of international investors. Indian authorities have been working to ease regulations to make it simpler for multilateral agencies to issue bonds.