The Hindu Business Line : IRFC raises Rs 810 cr through bonds

Indian Railway Finance Corporation (IRFC) has recently raised Rs 810 crore through bonds, mobilising a total of Rs 3,020 crore for the Indian Railways this fiscal till date.

IRFC, the finance mobilising arm of the Indian Railways, has been budgeted to raise a record high of Rs 4,170 crore for the Railways in 2006-07 and about Rs 500 crore for Rail Vikas Nigam Ltd. From the 3,020 crore raised this fiscal till date, Rs 1,620 crore have been mopped up through bonds, Rs 1,400 crore were raised through term loans, said official sources.

The recent Rs 810-crore bond issue had an average coupon rate of about 8.6 per cent with a weighted average tenure of ten years. While the rates do reflect the hardening trend of the market, the costs for IRFC's total borrowings are likely to go down when IRFC raises funds of up to $200 million through external commercial borrowings (ECBs). The bond tenor for the recent Rs 810-crore issue varied between five years, ten years, 15 years and 20 years. Earlier this fiscal, IRFC had raised Rs 810 crore for about 8.3 per cent with an average tenor of 15 years. The term loans, all of which have five-year tenors, raised by IRFC include Rs 50 crore raised at eight per cent per annum, Rs 400 crore (in tranches of Rs 250 crore and Rs 150 crore) at 8.15 per cent, Rs 200 crore at 8.25 per cent and Rs 640 crore at 8.4 per cent per annum.

In 2005-06, the public sector unit had raised Rs 3,968 crore (including Rs 3,450 crore for the Indian Railways and Rs 518 crore for Rail Vikas Nigam Ltd). The borrowings comprised Rs 1,300 crore of floating and fixed interest rate taxable bonds, Rs 558.95 crore (Japanese yen 14.72 billion) through syndicated foreign currency loan and Rs 2,093 crore through term loans from banks. It also had an opening balance of Rs 15.52 crore carried forward from previous year. The overall weighted average cost of funds raised in 2005-06 was about seven per cent per annum. IRFC mobilises funds, which are used to buy rolling stock for the Railways. It leases the stock to the Railways, which in turn pays lease rentals to IRFC in advance on a half-yearly basis.

The lease rentals are fixed at a mark-up of average borrowing costs at the end of every fiscal through an agreement between IRFC and the Railways.

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