Indian Railway Finance Corp raises USD 500 mn with 10-year green bond

Mumbai : Indian Railway Finance Corporation Limited (IRFC) has successfully raised USD 500 million which is a 10-year green bond from investors in Asia, Europe and Middle-East and offshore US.

The corporation received order for more than USD 1.6 billion with 99 investors consisting of very high quality accounts.

It is the corporation’s inaugural foray into the green bond market with this. S K Pattanayak, MD, IRFC said, “. This was IRFC’s return to the international bond markets since February 2014, so investors were very keen to gain exposure to a rare high-quality credit from India. The issue has been oversubscribed by 3x times and managed to achieve a very strong price compression. The successful completion of the deal underscores investor’s confidence in IRFC.”

The 10-year benchmark has a semi-annual coupon of 3.835 per cent per annum and a maturity date of December 13, 2027. It offers investors a yield of 3.835 per cent, equivalent to 145 basis points over the 2.25 per cent UST due November 15, 2027.

This green bonds will be used to finance the eligible green projects under dedicated freight railway lines and public passenger transport. The green bonds have been certificated by the Climate Bond Initiative (CBI), while the Green Bond Framework formulated by IRFC has been verified by KPMG.

Barclays, HSBC, MUFG and Standard Chartered Bank acted as joint bookrunners and joint lead managers for the issue.

The corporation is under the administrative control of Ministry of Railways (MOR) and plays a critical role in the Indian government’s plans and policies given its exclusive role as financier to MOR.

At present majority of the  green bonds that India receives is for renewable energy but now many other sectors are also attracting green bonds.