Indian Railway Finance Corporation banks on 3-5 year bonds to raise up to Rs 4,000 crore

By Saikat Das, economictimes.indiatimes.com

MUMBAI: Indian Railway Finance Corporation (IRFC), the stateowned financier for railway projects, plans to raise up to Rs 4,000 crore by selling bonds with shorter maturities as it aims to reduce borrowing costs by taking advantage of the Reserve Bank of India’s (RBI) falling rate cycle.

A top executive with the railways told ET that the triple-A rated company may launch the bond issue as early as this week. IRFC may offer 3-5 year maturities, unlike its usual bond sales with 10-15 year maturities, to raise Rs 3,000-4,000 crore, the executive said, on condition of anonymity.

According to market participants, the rates could be fixed in the range of 8.15-8.20%. “There is no point in paying more than 8% rate for 10 years, especially when interest rates are trending downward,” the executive said. “Rather, IRFC can go for shorter maturities below five years and refinance the same periodically at lower rates.”  More info

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