IRFC raises Rs 2,840 cr through 10-year bonds at 7.15% interest rate

Indian Railways' finance arm was in the market to raise Rs 3,000 cr

Indian Railway Finance Corporation (IRFC), which mobilises funds from domestic and capital markets for the Railways, has raised Rs 2,840 crore through 10-year bonds at a coupon rate of 7.15 per cent, sources said.

 

IRFC was in the market to raise Rs 3,000 crore, with a base issue of Rs 500 crore and green shoe option of Rs 2,500 crore. The bonds were rated ‘AAA’ by CRISIL, ICRA and CARE, all domestic agencies. While IRFC received bids worth Rs 5,640 crore, it retained Rs 2,840 crore, sources said.

 

Earlier this month, IRFC raised Rs 2,345 crore through 10-year bonds at a coupon rate of 7.09 per cent. The coupon rate for its latest bonds is six basis points higher, reflecting the movement in the yields of 10-year Indian government securities and following a rate cut by the US Federal Reserve.

 

Separately, Tata Capital Housing Finance has raised Rs 500 crore through bonds maturing in 43 months, with a coupon rate of 7.685 per cent, sources said. The private company aimed to raise Rs 1,000 crore (with a base size of Rs 500 crore and a green shoe option of Rs 500 crore), but only managed to raise the base size.

 

“IRFC retained Rs 2,850 crore at a yield of 7.15 per cent, reflecting the current market environment and slight hardening of rates. The rise in yields aligns with prevailing market conditions, as banking system liquidity remains in significant deficit,” said Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap LLP.

 

The Reserve Bank of India on Tuesday issued state development loans (SDLs) of 10-year tenors and cut-off yields ranging between 7.11 per cent and 7.19 per cent (semi-annual). The response to both SDL and IRFC issuances highlights strong investor appetite for long-term high-quality debt instruments, he said.

 

Earlier this week, Housing and Urban Development Corporation (HUDCO) raised Rs 1,230 crore through 10-year papers at 7.12 per cent. Power Grid Corporation of India (PGCI) raised Rs 3,975 crore through 10-year papers at 7.12 per cent. Hudco aimed to raise Rs 2,500 crore and PGCI Rs 4,250.