Nifra set to issue dollar bonds, list at the London Exchange

Kathmandu, Mar. 14

In its maiden effort to raise funds for infrastructure investment, Nepal Infrastructure Bank Limited (Nifra), is issuing bond equivalent to US$20-30 million at the international market within the current fiscal year 2020/21.

It would be one of the first financial instruments to be listed at the international stock exchange from Nepal.

The bank has made all the initial preparations for the international issuance and the Nepal Rastra Bank has already approved the move aimed at raising the fund at the global level.

Nifra initially intended to raise US$ 50 million to 150 million from the international market. However, the absence of credit rating of the bonds as well as the country created hesitation on the part of the bank, said Ram Krishna Khatiwada, Chief Executive Officer of Nifra while talking to journalists at an interaction organised by the Nepalese Association of Financial Journalists (NAFIJ).

He said that the bank is yet to create its identity at the international markets therefore the company wanted to test it with a pilot programme of issuing bonds of small amount which would be listed at the London Stock Exchange.

Meanwhile, to maintain safety from the exchange risks and manage foreign currency, the bank is issuing bonds in synthetic Indian currency.

CEO Khatiwada was critical of the news and information aimed at increasing or decreasing the price of the shares of the bank at the stock market. He stated that the bonus of Nifra would be around 5-7 per cent with the current Rs. 2 billion capital fund.

"There were rumours on the social media that Nifra was issuing rights share to raise more funds. It is true that the bank that aims at facilitating and financing the infrastructure development in the country needs more funds than it has now but for at least a couple of years, there will not be any further issuance," he said.

Since infrastructure projects need longer gestation period, seeking immediate return or benefit from them is unrealistic. Some projects take years in preparation and even longer period in execution, he maintained.

The bank is in the process to finance about a dozen projects of Rs. 15 billion. It is also seeking international strategic partners. "We are working on it. Some institutions are interested to come to Nepal," said Khatiwada.

He said that Nepal needs blended finance in infrastructure projects. "Only government funds are not sufficient for the country like Nepal that has high development hunger. We need private investment at all levels," he said.

Nifra was launched in March 2019 with the aim to support in national infrastructure priority, fund acquisition, investment, project development and provide advisory services in infrastructure development.

According to the estimates of the National Planning Commission and World Bank, Nepal needs to invest 10–15 per cent of its Gross Domestic Product to infrastructure development to become a middle income country by 2030. It means the country is in need of about 10 billion dollars for infrastructure every year.

Published in The Rising Nepal daily on 15 March 2021.