Money & Banking

IRFC mops up $500 million in green offshore bonds

K.R.Srivats | Updated on: Jan 14, 2022
image caption

First CPSE to exclusively list Green Offshore Bonds in Gift City exchanges

Indian Railway Finance Corporation Limited (IRFC), the dedicated market borrowing arm of the Indian Railways, on Thursday, launched its $500 million 144A/Reg S USD Bonds offering with exclusive listing at India INX and NSE-IFSC, which are the two exchanges at Gift City, the country’s sole international financial services centre ( IFSC).

These bonds were launched under the $7 billion Global Medium Term Note (GMTN) Programme rated at par with the sovereign. A Reg S status means the bond need not be registered with the US Securities and Exchange Commission. On the other hand, Rule 144A enables bonds to still be sold to institutional investors (Qualified Institutional Buyers) in the US.

IRFC is the first Central Public Sector Enterprise (CPSE) to list its offshore bonds exclusively at Indian stock exchanges established in the GIFT City, Gandhinagar.

The bonds were issued in a single tranche of 10 years. The order book of the $ 500 million 10-year tranches was oversubscribed to the tune of 2.4 times. 

Exclusive listing

Speaking on the exclusive listing, Amitabh Banerjee, Chairman and Managing Director, IRFC said: “IRFC’s return to the bond market and the overwhelming support from international investors underscores the confidence in IRFC as the premier quasi-sovereign issuer in the country.”

Banerjee also said that the listing of Green Offshore Bonds by IRFC shall give impetus to other CPSEs and other SOEs across India to follow the same path and proceed with exclusive listing at Indian Stock Exchanges. Such exclusive listings shall help further an all-encompassing investment and credit environment in India, creating an enabling ecosystem towards fulfilling the mission of Aatmanirbhar Bharat. Moreover, suchexclusive listings at Indian stock exchanges shall assist the Indian Investment and credit environment to truly become world-class, he added.

In the current highly uncertain volatile conditions, the bonds have been priced very tightly over the 10-year benchmark UST because of the superior credit quality of IRFC. Even in volatile market conditions this year, IRFC managed to price the deal at negligible new issue concession over their existing secondary.

A strong response

The captioned bonds issuance received a strong response from the USA, Asia, Europe and EMEA. The investors ranged from Sovereign funds, Investment Funds, Pension Funds, Insurance Funds, Asset Management Companies, Banks and Hedge funds spread across the globe.

IRFC’s USD 144A/Reg S Bonds are Green Bonds issued under IRFC’s Green Framework for Green Debt Financing, with exclusive listing being done at INX and NSE-IFSC. 

The funds raised under the IRFC 144/Reg S Green Bonds would be utilized for green end uses as iterated in IRFC’s Green Framework for Green Debt Financing which has been duly certified by Climate Bonds Initiative.

The funds raised under IRFC 144/Reg S Green bonds shall assist Indian Railways in meeting its target of carbon neutrality and meeting the wider targets set by the Government of India to meet the emission and carbon norms decided in COP26.

Further, the issuance of Green Bonds by IRFC would open the avenue for other CPSES to target the Green Bonds market as the green issuances in India are still at a nascent stage. 

On account of the IRFC 144/Reg S Bonds being Green in nature, the same was subscribed to by many new investors, which generated huge appetite amongst the diverse investor group and simultaneously brought in new investors to the Indian credit market.

Published on January 14, 2022

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

  1. Comments will be moderated by The Hindu editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.

You May Also Like

Recommended for you