The National Highways Authority of India (NHAI), established under the 1988 NHAI Act, manages national highways, ensuring transparency, quality, and user convenience in their development and maintenance.
The National Highways Infra Trust has cancelled its bond issue worth ₹1,400 crore. This decision was attributed to high interest rates and a lack of interest from investors, as reported by three knowledgeable sources.
The infrastructure investment trust associated with the National Highways Authority of India was seeking a very low coupon rate, while investors were only prepared to invest at a higher rate.
The issuer, having received 33 bids for a coupon rate between 7.15% and 7.79%, anticipated that the 17-year bond would be issued with a coupon rate of 7.30% to 7.40%.
However, a mismatch between the issuer’s expectations and investor interest led the company to withdraw its bond offering, which was meant to follow a period of inactivity. The bond issue had an initial size of ₹700 crore, along with a greenshoe option of ₹700 crore.
This situation arises as the company has been attempting to access the debt market for some time. The last occasion on which the National Highways Infra Trust engaged with the debt market was in October 2022, when it successfully raised ₹1,500 crore through a public offering of bonds with maturities of 13, 18, and 25 years, featuring separately transferable and redeemable principal parts structure.
The infrastructure investment trust is backed by the NHAI, which monetises national highway projects through models such as toll-operate-transfer, infrastructure investment trusts, and securitisation.
In the toll-operate-transfer model, the NHAI grants toll collection rights and operational and maintenance responsibilities to private firms in exchange for a one-off payment of concession fees.
In the InvIT model, assets are assigned to a trust that functions like a collective investment scheme, akin to a mutual fund. An InvIT allows both individual and institutional investors to invest directly in infrastructure projects, enabling them to receive a share of the income generated as a return on their investment.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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