New Delhi: Indian Railway Finance Corporation (IRFC), the financing arm of the ministry of railways, has taken the lead in mobilising overseas debt in line with a government directive aimed at strengthening dollar inflows to wade through the expected tapering of the US government’s bond-buying programme next year. While others are still making early plans, the IRFC has mobilised $400 million as syndicated loans from three overseas banks and is now planning road shows to complete the balance debt raising plan of $600 million in January by issuing quasi sovereign bonds in overseas markets.
The Power Finance Corporation and IIFCL are still at a planning stage to complete their quotas ($1.5 billion each) of overseas bond issue.
In fact, PFC has not even confirmed that it would raise money from abroad in the form of quasi-sovereign bonds.
In August, the finance ministry mandated the IIFCL, PFC and IRFC to raise a total of $4 billion through quasi-sovereign bonds and asked banks and PSUs to raise NRI deposits and external commercial borrowings to help prop up the rupee and finance the current account deficit.
“The $1-billion target for us necessarily may not be all quasi-sovereign bonds. We have completed deal for $ 400 million in the form of loan of 5 years and depending on coupon rate we get, we will decide on overseas bonds for balance $600 million,” a senior official of IRFC told FE.
The first tranche of overseas lending has been committed by a consortium of three Japanese banks, including Mizuho Bank, SMBC and Bank of Tokyo and the State Bank of India. The official did not spell out the rate at which the loan has been offered but said it has got a very good deal. “The money under this loan will start coming in over next few weeks so our bonds issue will be between January and March next year in at least two tranches,” the official said.
The company intends to start road shows for its bonds issue later in December and will also look at tapping Sovereign Wealth Funds in Asian and European markets for its issue.