• India’s infrastructure financing ecosystem has taken a significant leap forward as the National Bank for Financing Infrastructure and Development (NaBFID) backed its first-ever Partial Credit Enhancement (PCE) for a corporate bond issue.
• The facility will support Think Gas Ludhiana’s proposed ₹620 crore Non-Convertible Debenture (NCD) issue, marking a landmark step in developing India’s corporate bond market and improving long-term infrastructure financing.
• The move is expected to make infrastructure bonds more attractive to institutional investors, lower borrowing costs for infrastructure companies, and reduce dependence on traditional bank lending.

NaBFID’s First Credit-Enhanced Bond Issue

• NaBFID will provide a Partial Credit Enhancement (PCE) for Think Gas Ludhiana’s planned ₹620 crore bond issue.
• This is the first transaction under NaBFID’s government-backed PCE programme, which was launched in September 2025 to facilitate easier access to long-term capital for infrastructure projects.
• The bond issue is expected to hit the market later this month.

What is Partial Credit Enhancement (PCE)?

Partial Credit Enhancement is a financial mechanism where an institution like NaBFID provides a guarantee covering part of the repayment obligations of a bond issuer.

Under this arrangement:

• NaBFID guarantees a portion of the principal and interest.
• The guarantee improves the credit rating of the bond.
• Investors receive greater repayment security.
• Companies can borrow at lower interest rates.
• Long-term infrastructure projects gain easier access to funding.

This mechanism encourages participation from insurance companies, pension funds and other long-term investors.

Credit Rating Upgraded from A to AA+

One of the biggest advantages of the PCE facility is the improvement in the bond’s credit profile.

After NaBFID’s support:

• Standalone Rating: A
• Enhanced Rating: AA+ (CE)

The enhanced rating has been assigned by CARE Ratings and India Ratings.

According to CARE Ratings, NaBFID’s guarantee covers 43% of the proposed NCD amount, including both principal repayment and interest obligations.

This four-notch upgrade significantly increases investor confidence.

How the Facility Works

NaBFID’s credit enhancement is provided in the form of an:

• Unconditional
• Irrevocable
• Non-fund-based guarantee

Instead of directly lending money, NaBFID guarantees a portion of the bond repayment, thereby reducing the perceived risk for investors.

This enables infrastructure companies to raise larger amounts from capital markets at competitive rates.

Strengthening India’s Corporate Bond Market

• NaBFID Managing Director and CEO Rohit Rajkiran Rai G said the institution intends to replicate this model across more infrastructure companies.
• According to him, once the model proves successful, NaBFID will encourage A-rated infrastructure companies to raise funds through bond issuances rather than relying solely on bank loans.
• The objective is to create a vibrant corporate bond market capable of financing India’s growing infrastructure requirements.

Benefits of the Credit Enhancement Model

The new financing structure offers multiple advantages:

• Improves bond ratings.
• Reduces borrowing costs.
• Attracts pension and insurance funds.
• Diversifies funding sources.
• Deepens India’s corporate bond market.
• Supports long-term infrastructure financing.
• Reduces dependence on traditional bank credit.

Government’s Infrastructure Financing Vision

NaBFID was established to become India’s premier Development Finance Institution (DFI) focused exclusively on infrastructure financing.

Its Partial Credit Enhancement framework complements the Government of India’s efforts to:

• Expand infrastructure investment.
• Develop deeper debt markets.
• Improve availability of long-term finance.
• Support the Viksit Bharat 2047 vision.

If widely adopted, the model could become a key pillar of India’s infrastructure financing architecture.

Conclusion

• NaBFID’s first Partial Credit Enhancement-backed bond issue represents a major milestone for India’s financial markets.
• By supporting Think Gas Ludhiana’s ₹620 crore bond issue, the institution has demonstrated how credit enhancement can improve bond ratings, lower financing costs and attract long-term investors.
• As more infrastructure companies adopt this model, India’s corporate bond market is expected to play a much larger role in financing roads, energy, logistics, urban development and other critical infrastructure projects, accelerating the country’s journey toward sustainable economic growth.