IRFC, IIFCL raise funds through long term bonds at attractive coupon rates

State-owned Indian Railway Finance Corporation (IRFC) and India Infrastructure Finance Company Ltd (IIFCL) on Wednesday raised Rs 4,000 crore cumulatively at attractive coupon rates through long-term bonds, sources said.

 

While IRFC raised Rs 3,000 crore through 10-year bonds at a coupon rate of 7.17 per cent, IIFCL raised Rs 1,000 crore through 7-year bonds at 7.28 per cent. Additionally, on Tuesday, Housing and Urban Development Corporation (HUDCO) raised Rs 2,000 crore through 10-year bonds at a favourable coupon rate of 7.19 per cent.

 

Market participants said investors are aggressively positioning ahead of the April monetary policy committee (MPC) meeting, anticipating rate cuts in April and June to drive mark-to-market gains in the next financial year.

 

“Corporate bond issuances, particularly from public sector entities like Exim Bank, HUDCO, IREDA, IRFC, and IIFCL, have witnessed a strong bid-to-cover ratio, with institutional investors locking in spreads ahead of a potential monetary policy shift,” said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP.

 

“…expectations of rate cuts in April and June—potentially accompanied by a shift in policy stance—investors are positioning ahead of the curve to lock in yields and capture potential Treasury gains in FY26,” he said, adding that a confluence of factors, including the absence of fresh government bond supply during March, the seasonal dry spell in corporate bond issuance during April, and the re-entry of foreign portfolio investors (FPIs), has further fuelled demand for high-quality fixed-income instruments.

 

The RBI’s monetary policy committee (MPC) cut policy rates by 25 basis points (bps) in February, and the market expects at least two more rate cuts in April and June. This would be driven by the latest inflation print falling below 4 per cent and the need for a monetary push to support economic growth.

 

About a week ago, major state-owned issuers, including National Bank for Agriculture and Rural Development (Nabard) and Small Industries Development Bank of India (Sidbi), raised Rs 14,000 crore through medium- and short-tenor bonds as an oversupply of long-term bonds had driven yields higher.

 

Fundraising by corporates in the current financial year (FY25) is expected to surpass the amount raised in FY24. So far in FY25 (up to February), corporates have raised Rs 9.6 trillion through bonds. In FY24, they had raised Rs 10.19 trillion, the highest amount raised through bonds since FY20.

 

Meanwhile, National Bank for Financing Infrastructure and Development (NaBFID) is looking to raise Rs 3,000 crore through 10-year bonds this week.