IRFC Overseas Bond issue subscribed six times

Mumbai:  Indian Railway Finance Corporation has raised $500 million or about Rs.3,100 crore through privately placed bonds with institutional investors in US, Europe and Asia. They are offering a coupon of 3.917% for five-year maturity.

“The issue was fully subscribed on Wednesday itself,” a senior IRFC official told on conditions of anonymity. “We will buy currency hedge over a period of time but not today itself. Rupee should be more stable after the general election. We stand to gain in case of any rupee appreciation.”

Bonds can be traded in the secondary market and will be listed in the Singapore Stock Exchange. The coupon has been derived at after adding 245 basis points over and above the five-year US Treasury bill which was trading at about 1.47%.

The company has headroom to raise $1,000 million or 1 billion under the external commercial borrowing route as mandated by the government. Earlier in December, 2013; the company had raised $400 million. These bonds do not have any call or put option. IRFC will repay its liability at a fixed rate in bullet mode that is in one-shot at the end of five years.

Three rating companies namely Moody’s, S&P and Fitch have rated the issuance with Baa3, BBB- and BBB- grades respectively. These offshore bonds are called Regulation S where they may not be necessarily offered and sold within US.

ANZ, Barclays, Deutsche Bank and The Royal Bank of Scotland are some of the investment bankers for the issue and were the book running lead managers. Listing of the bonds will be on Singapore’s SGX exchange.  Majority of subscription has come from fund managers while banks and insurance players too have invested.

“The issue evinced good amount of interest among investors. We received an order book for $3 billion. We rejected the rest above the issue limit,” said an investment banker who did not wish to be identified.