Did some more digging online.
the only mention of any “Sovereign guarantee” associated with these IFCI bonds i could find is…
The different guarantees given by the Union Government are as follows:
- Guarantees given to RBIs, other banks and Financial Institutions (like IFCI, LIC, UTI etc) for repayment of principal and payment of interest, cash credit facility, financing seasonal agricultural operations, and for providing working capital in respect of companies, corporations, cooperative societies and cooperative banks
…
[ Source ]
However, the reference pointed to in the above arthapedia page is a dead link.
So, not sure how accurate this info is.
Couple of other related observations…
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IFCI is classified as NBFC-ND-SI.
IFCI is also registered with the Reserve Bank of India (RBI)
as a Systemically Important Non-Deposit taking NBFC (NBFC-ND-SI)[ Source ]
What this means is they have additional set of regulations to comply with.
Presumably this ensures better governance/regulation and implies lesser risks compared to typical NBFCs.A somewhat recent development that may prove to be a twist in the tale
is RBI’s introduction of Scale-Based Regulatory approach (SBR)
which minimizes additional regulation on NBFCs with lesser net asset value.
(IIUC, IFCI appears to fall under NBFC-BL / NBFC-ML with minimal regulations)
[ Source ] -
More than 18 months left for the current tranche of bonds to mature (DEC 2024).
Not sure if there will be another IFCI bond IPO in the near future 2023/24.
Currently, IFCI appears to be planning to raise money by a preferential issue without involving the public.
[ Source ]
