IRFC places 30-yr Bonds worth Rs 5000 Crore with LIC

Indian Railway Finance Corporation (IRFC), the finance arm of the Indian Railways, has placed a 30-year bond worth Rs.5,000 crore with the Life Insurance Corporation of India (LIC), according to sources aware of the development

IR IRFC offshore rupee bondsIndian Railway Finance Corporation (IRFC), the finance arm of the Indian Railways, has placed a 30-year bond worth Rs.5,000 crore with the Life Insurance Corporation of India (LIC), according to sources aware of the development.

The bonds come with staggered redemptions starting in the 11th year till the 30th year with a coupon reset after 10 and 20 years, according to the sources.

“The bonds will have a coupon rate of 8.02% on a semi-annual basis,” a source said adding that there is a moratorium on the interest payment till five years.

In 2015, the insurer had signed a memorandum of understanding (MoU) with the Indian Railways under which LIC was to invest Rs.1.5 lakh crore in Indian Railways over a period of five years.

In September, FE had reported that IRFC will play the intermediary for raising a large part of the proposed Rs.1.5 lakh crore loan from LIC and the instrument will be a 30-year paper. In October, the Indian Railways had received Rs.2,000 crore from LIC.

Long-term papers have been a rarity among Indian players. In recent times, few firms have issued bonds having maturities close to 30 years. Bloomberg data shows that Family Credit has issued 33-year bonds at 10.10% coupon rate in March. M&M was in the news when it had issued 50-year bonds in 2013.

IRFC had earlier issued 20-year papers in December 2015 when it had raised funds through tax-free bonds. The company was reportedly looking to issue offshore-rupee denominated bonds or masala bonds but no development has come in so far.

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