Irfc Issue Likely To Be Oversubscribed
The Rs 200-crore, tax-free bonds issue of the Indian Railway Finance Corporation (IRFC) which closes today is expected to be over-subscribed.
According to market sources, bonds worth Rs 175 crore had already been purchased until February 7, with bonds worth another Rs 100 crore in the pipeline. Therefore, the issue collections are expected to touch at least Rs 275 crore, or an excess of Rs 75 crore. The corporation will probably retain the oversubscribed amount after obtaining governmental permission.
However, the exact amount by which the issue has been oversubscribed is still not certain. An accurate figure will be ascertained only after the full information from the different collection centres spread all over the country is received and compiled.
The success of the issue has come as a shot in the arm for the corporation, especially considering the lukewarm response that it had initially received.
According to sources, barely 50 per cent of the issue size was subscribed during the first month of its opening, forcing the extension of the closing date from January 23 to February 10.
The poor response to the issue was attributed to the market having been flooded with several other bond issues, including the Industrial Development Bank of India's flexibonds. Besides, it was argued that investors had lost interest in tax-free bonds owing to the prevailing trend of declining tax rates. However, IRFC sources opined that the initial lack of investor interest was due to the fact that it had already been provisioned that the closing date was extendible. With a number of large public and private sector financial institutions coming forward, the situation has since changed dramatically.
IRFC has thus duplicated the success of last year's Rs 400-crore bonds issue, which was oversubscribed by approximately Rs 90 crore. Although the participation of the port trusts