The Hindu Business Line : IRFC to raise $200-250 m via foreign bond route

THE Indian Railway Finance Corporation (IRFC) will raise $200-250 million from the overseas market during fiscal 2004-05 to meet the borrowing target of Rs 3,400 crore set by the Railway Budget.

``We will borrow $200 million immediately either through issuing fixed rate bonds or floating rate notes in the overseas market,'' a top IRFC official told Business Line.

Given its sub-sovereign profile, IRFC has been raising funds at very competitive rates from the capital markets. In March 2004, the borrowing and leasing arm of the Indian Railways, had mopped up $80 million from the external market through a syndicated loan at 90 basis points above Libor, which translated into an all-inclusive cost of 2.8 per cent.

During 2003-04, IRFC borrowed Rs 2,834 crore as against a target of Rs 2,970 crore at an average cost of 5.7 per cent, the official said.

IRFC is mandated with the task of borrowing funds from the market to be used for acquiring rolling stock which are then leased out to the Indian Railways for which the Railways pays annual lease charges to IRFC.

During 2003-04, Indian Railways paid Rs 3,027.57 crore to IRFC as lease charges as against Rs 2,887.08 crore paid during 2002-03.

``While the lease charges paid by Railways has increased marginally, the IRFC had added another Rs 3,000 crore worth of assets to Indian Railways during the year which generates a major portion of revenues for the Railways,'' the official said.

About 50 per cent of the wagons, 47 per cent of the coaches and 46 per cent of the locomotives operated by the Indian Railways are procured by IRFC and leased to Indian Railways.

So far, about Rs 25,000 crore worth of assets have been created thorough IRFC since its inception.

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