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Exclusive| Indian Railway Finance Corp raises Rs 1,994 crore in June through 20-yr bonds

The company's bonds have been in high demand following the central government's decision to boost spending on infrastructure projects to lead the country’s post-pandemic economic recovery. The finance arm of the Indian Railways plans to raise over Rs 1 lakh crore in fiscal year 2022.

June 14, 2021 / 02:39 PM IST

In line with its plan to raise funds in excess of Rs 1 lakh crore in 2021-22 (Apr-Mar) for infrastructure development and implementation of various projects, the Indian Railway Finance Corp (IRFC) has raised Rs 1,994 crore through a 20-year bond at a coupon of 6.99 percent, sources told Moneycontrol. The issue was closed on June 2.

The financing arm of the Indian Railways raised the money through an issue with a base size of Rs 1,000 crore, and a greenshoe option of Rs 5,000 crore, sources said. IRFC’s bonds are rated BBB-minus by Fitch Rating and AAA by CRISIL.

The company's bonds have been in high demand following the central government's decision to boost spending on infrastructure projects to lead the country’s post-pandemic economic recovery.

IRFC had, in March, raised Rs 1,375 crore through a 20-year bond issue at 6.8 percent, a rate of return lower than a government paper maturing in 2041, which offers an annualised yield of about 6.90 percent.

IRFC may also provide funding for the Indian Railways' ambitious projects like the dedicated freight corridor and station redevelopment projects in New Delhi and Mumbai CST.

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It is in talks with the National High Speed Rail Corporation Ltd to finance the extended portion of the Ahmedabad-Mumbai High Speed Rail Project.

Funding plans

IRFC is also looking to finance private players which have operational linkage with the Indian Railways.

“As such, our memorandum of articles permits us to finance any sector which has forward or backward linkage with the Indian Railways, including ports and logistics for connectivity. We can fund the logistics sector, if it helps augmenting the freight-carrying capacity of Indian Railways. We are open to fund them,” IRFC Chairman and Managing Director Amitabh Banerjee had said earlier this year.

The company is also in talks to provide funding for the privatisation of certain segments of the railways, including the operation of high-speed trains on certain routes.

“With an investment of about Rs 30,000 crore, private players will procure their own rolling stock and run on these routes. Some of them have also approached us for financing the rolling stock because of the low-cost funding we provide,” Banerjee had said.

The company's board has till now approved the raising of around Rs 65,300 crore in 2021-22 (Apr-Mar) through taxable bonds, tax-free bonds, government-guaranteed or serviced bonds, and securitisation of future lease receivables from railways, sources said.

The company has been playing a critical role in the growth, expansion and modernisation of Indian Railways, and the Centre is expected to remain its largest client for at least the next 8-10 years because of the execution of the National Rail Plan, under which the government aims to spend Rs 10 lakh crore to augment capacities and improve infrastructure.
Yaruqhullah Khan
first published: Jun 14, 2021 02:39 pm

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