IRFC Mops Up $750 Million In First Bond Sale After Listing
Trains sit idle at the Delhi Junction railway station during a lockdown. Photographer: T. Narayan/Bloomberg

IRFC Mops Up $750 Million In First Bond Sale After Listing

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The Indian Railway Finance Corporation Ltd., which only concluded its initial public offering last month, has raised $750 million in 10-year dollar money from international investors.

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

IRFC has raised $750 million in 10-year dollar bond sale on Thursday to international investors, it said in a media statement.

The 10-year RegS bonds are priced with an annual coupon rate as low as 2.8%, which is only 167.5 basis points over the U.S. treasury.

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

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 $4 billion for this fiscal, which was only $2 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 Ultratech Cement have raised close to $4 billion in dollar bond sales as the interest rates are at the lowest in decades.

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

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

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