IRFC to raise up to Rs 3,000 crore via 10-year NCDs

"We expect coupon rate on our 10-year NCDs will be set below the current market," a person close to the issuance in the company said.

Indian Railway Finance Corporation (IRFC) will raise up to Rs 3,000 crore through issuance of unsecured, redeemable, taxable non-convertible debentures (NCD) maturing in 10-year.

The NCDs have a base issue of Rs 500 crore, with retain oversubscription of Rs 2,500 crore.

The 10-year NCDs will mature on July 19, 2031, while bidding for the bonds will take place on July 15 between 10:30 am and 11:30 am on National Stock Exchange’s bidding platform.

The company did not specify that what it intend to do with this capital.

The issuer did not fixed any coupon, rather said it will be set during the bidding.

“We expect coupon rate on our 10-year NCDs will be set below the current market,” a person close to the issuance in the company said.

While, market participants and arrangers close to the issue said that the coupon rate on IRFC’s NCDs will be set mostly between 6.75% and 6.80%, which is almost 5-10 basis points lower than the current market rate.

Currently, the rates on 10-year NCDs were hovering between 6.90% and 6.95%.

But, this seems to be higher because on June 6, the company had raised Rs 1,994 crore via 20-year bonds at 6.99% coupon.

In this calendar year, the company has issued three bonds, of which two mature in 20 years and 1 gets mature in 2-year. With all these bonds, the company raised approximately Rs 6,369 crore.

Meanwhile, the overall issuance of bonds as per market participants is expected to be at Rs 30,000 crore in June through the private placement route.

This is lower than it was raised in May because the increase in borrowing cost forced most issuer to stay away from the market.