Indian Railways Finance Corporation Raises Funds At Lower Rates Than Sovereign Bonds

In a major development, the Indian Railway Finance Corporation (IRFC), the dedicated financing arm of the Indian Railways has raised Rs 1,375 crore through the issuance of domestic bonds.

The fund has been raised at a 6.80 per cent coupon rate with a 20-year maturity, IRFC said in a statement. Notably, this figure is about 18 basis points lower than the benchmark par yield Government security as per yesterday’s close in CCIL.

"This is one of the rare occasions when a top-rated government issuer has pierced the sovereign curve in the domestic market with such a huge margin. This shows the confidence reposed by the large debt investors in the country for IRFC papers scotching the speculations in certain quarters about rising cost and heightened risk perception post IPO and dilution of Government stake," IRFC said.

"The bond issuance received a very good response from the investors comprising long term/ultra-long-term investors including primarily the provident funds. The issue was oversubscribed by six times as compared to the base issue size of Rs 500 crore," said a company statement.

With the current issuance, the cumulative fundraising through 20-year bond issuance in the domestic capital market during the current fiscal has touched around Rs 13,970 crore, it said.

The corporate bonds in the domestic market are liquid for tenor up to 10 years. Such large issuances by IRFC have deepened the corporate bond market.

With IANS Inputs