Infra funds to get a push with escrow first charge

In March, ICICI Bank joined Bank of Baroda, Citi and Life Insurance Corporation to float an IDF with a $2-billion corpus, while IIFCL roped in IDBI Bank, LIC, ADB, Barclays and HSBC for a $1-billion IDF. Many more are in the pipeline.

While ensuring prompt payment to bondholders, the government has capped the overall exposure of IDFs in road projects to 85% of the total debt component of the project. The concessionaire can issue additional bonds not more than 15% of the total debt with prior NHAI approval.

The tenure, interest rate and other commercial terms of bonds must be determined by mutual agreement between the IDF and the concessionaire. The bonds must be in denomination of Rs 1 lakh each or up to Rs 10,000 each. The IDF and the concessionaire may allocate and bear the foreign exchange risks on bonds sold overseas.

"Any delay in repayment of principal or interest for and in respect of the bonds shall attract interest at a rate of 3% above the rate of interest applicable for the bonds," the notification said.

IDFs can sell off bonds of the concessionaire to any other person without any notice if these are listed in any recognised stock exchange. IDFs can also extend a term loan to the concessionaire for an amount not exceeding 50% of its total exposure to the concessionaire and such a loan will be treated like a bond.

The tripartite agreement will cease if the company opts for early bond redemption.

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