IRFC mops up $750 million in maiden bond sale after initial public offering

IRFC had a bumper IPO last month

Indian Railway Finance Corporation (IRFC), which had a bumper IPO last month, has raised USD 750 million in 10-year dollar money from international investors, two merchant banking sources said.

This is the maiden debt market activity that Railways' financing arm has done since going public on January 29 after the biggest IPO of the fiscal collecting Rs 4,633 crore through a public issue. It was subscribed 3.49 times during January 18-20.

IRFC has raised USD 750 million in 10-year dollar bond sale on Thursday to international investors, the merchant bankers told PTI.

Given the sovereign backing of the issuer, the 10-year RegS bonds are priced dirt cheap with a annual coupon rate as low as 2.8 per cent, which is only 167.5 bps over the US treasury, the source added.

Regulation S bonds are issued by foreign issuers in the US debt market and are denominated in US dollars, but resident American citizens cannot subscribe to them.

IRFC could not be immediately reached for confirmation.

Standard Chartered, PNB Paribas, DBS, HSBC, MUFG and SBI Caps, among others, were the merchant bankers to the issue.

Fitch Ratings has given 'BBB-' rating to the issue with a negative outlook to the RegS/144A senior unsecured notes, which are part of IRFC's global medium-term note programme of USD 4 billion for this fiscal, which was only USD2 billion last fiscal.

The net proceeds from the proposed notes will be used for funding the acquisition of rail assets, which IRFC will lease to the Railways, and to meet the debt-financing requirements of various entities in the Indian railway sector, Fitch said.

Incorporated in 1986, IRFC follows a financial leasing model to finance acquisition of rolling stock assets, which includes locomotives, coaches, wagons, trucks, flats, electric multiple units, containers and cranes.

Since the first week of January, various domestic issuers like the Exim Bank, State Bank of India, Continnuum Wind Energy, Adani Ports, and Ultrtech Cements have raised close to USD 4 billion in dollar bond sales as the interest rates are at the lowest in decades.

Aditya Birla fagship firm Ultratech is the the market with a USD 400-million issue and is likely to be closed later in the day on Thursday.

IRFC's shares on Thursday rallied 4.5 per cent on the BSE to close at Rs 25.35 apiece.