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

The Indian Railway Finance Corporation (IRFC), which raises funds from domestic and capital markets for the Railways, has successfully secured Rs 2,840 crore through the issuance of 10-year bonds with a coupon rate of 7.15 percent, according to sources.

The IRFC aimed to raise a total of Rs 3,000 crore, consisting of a base issue of Rs 500 crore along with a green shoe option of Rs 2,500 crore. The bonds received a ‘AAA’ rating from three domestic agencies: CRISIL, ICRA, and CARE. While IRFC received bids totaling Rs 5,640 crore, it decided to retain Rs 2,840 crore, the sources added.

Earlier this month, IRFC raised Rs 2,345 crore through 10-year bonds at a coupon rate of 7.09 percent. 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, sources said that Tata Capital Housing Finance had raised Rs 500 crore through bonds maturing in 43 months, with a coupon rate of 7.685 percent. 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.

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“IRFC retained Rs 2,850 crore at a yield of 7.15 percent, 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 percent and 7.19 percent (semi-annual). The response to both SDL and IRFC issuances highlights strong investor appetite for long-term high-quality debt instruments, he said.

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