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Indian Railway Finance Corporation issues bonds at fixed rates of 2.80%

  1. Indian Railway Finance Corporation Limited priced its USD 750,000,000 bonds based on a Rule 144A / Regulation S offering format.

  2. This is under IRFC’s recently updated USD 4 billion global medium term note programme.

  3. The bonds achieved one of the tightest pricing by an Indian entity in the recent times.

Indian Railway Finance Corporation Limited has issued a bond worth USD 750,000,000. The bonds have been issued with a fixed rate of 2.80% based on the rule 144A / Regulation S offering format under IRFC’s recently updated USD 4 billion global medium term note programme.

A Press Release issued by the firm says the issuing of the bonds will happen on the 10th of February 2021. Interesting to note is that the bonds will last for a tenor of 10 years and will carry semi-annual interest payment and bullet principal repayment.

Commenting on the issuance, Shri Amitabh Banerjee, Chairman and Managing Director, IRFC, said, “IRFC is a well-known name in the foreign bond issuance. The amount is a part of our USD 4 billion global term note programme. We will be looking to raise the rest of the amount by the end of this fiscal. Our credit ratings are similar to the sovereign rating of the country which helps us in getting competitive rates with suitable tenors.

Launched on the 3rd of February 2021, the bonds have received overwhelming response from a diverse range of investors spread across the globe, the firm also oversubscribed nearly 4 times. Set for a tenure of 10 years the bonds are very tightly priced at 167.50bps with an over 10 year benchmark rate pegging the coupon at 2.80%.

Remarkable at its achievement is the fact that IRFC has been able to achieve a pricing even below the price at which its own secondary paper was trading in the international market. “The diverse set of investors included Sovereign Wealth Funds, Pension Funds, Life Insurance Companies, Banks and Asset Management Companies spread across Asia, Middle East, Europe and USA.

“The bonds achieved one of the tightest pricing by an Indian entity in the recent times. In spite of recent hardening in US treasury and credit margins, IRFC has been able to achieve a very fine pricing lower by approximately 55 bps as compared to recent issuances of identical tenor by its peers. This will help not only in diversification of borrowing portfolio of IRFC but also bring down the cost of borrowing of the company further in the current fiscal.”

The bonds will be listed on the Singapore Exchange Securities Trading Limited, India International Exchange (IFSC) Limited and International Securities Market of the London Stock Exchange.

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