Indian Railway Finance Corporation (IRFC), the borrowing arm of the Indian Railways, on Thursday said it had sold $750 million worth of dollar-denominated bonds to overseas investors priced at a coupon of just 2.80 per cent per annum.
This was the first debt market activity that Railways' financing arm undertook after it went public on January 29 following the biggest initial public offer (IPO) of the fiscal, collecting Rs 4,633 crore through a public issue. It was subscribed 3.49 times during January 18-20.
In a statement, the entity said the 144A/ Regulation S offering is under the company's recently updated USD 4 billion global medium-term note programme. It was only $2 billion, it said.
The bonds achieved one of the tightest pricings by a domestic entity in recent times, as the pricing is just 167.50 bps over the US treasury, it added.
The bonds will be issued on February 10, 2021, for 10 years at a fixed rate of 2.80%. They carry semi-annual interest payment and bullet principal repayment.
"We are a well-known name in the foreign bond issuance. The amount is a part of our USD 4 billion global medium-term note programme. We will be looking to raise the rest of the amount by the end of this fiscal," Amitabh Banerjee, Chairman and Managing Director, IRFC, was quoted as saying by news agency PTI.
He added the IRFC's credit ratings are similar to the sovereign ratings which help it get competitive rates with suitable tenors.
Launched on Wednesday, the issue received an overwhelming response from a varied set of investors across the globe, with an oversubscription of nearly four times.
The list of investors includes sovereign wealth and pension funds, life insurance companies, banks and asset management companies from Asia, the Middle East, Europe and the US. The bonds will be listed on the Singapore Exchange, India International Exchange and the London Stock Exchange.
Incorporated in 1986, IRFC follows a financial leasing model to finance the acquisition of rolling stock assets, which includes locomotives, coaches, wagons, trucks, flats, electric multiple units, containers and cranes.
Since the beginning of January, several domestic issuers, including Exim Bank, State Bank of India, Continuum Wind Energy, Adani Ports, and Ultratech Cements have raised close to $4 billion in dollar bond sales as the interest rates are at the lowest in decades, PTI reported.
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.
IRFC's shares on Thursday rallied 4.5 per cent on the BSE to close at Rs 25.35 apiece.
(With inputs from agencies)