The Indian Railway Finance Corporation (IRFC) has signed an agreement with the Japanese banking major, Sumitomo Mitsui Banking Corporation, for a loan of $300 million. In an exchange filing, IRFC stated that this is the company’s first commercial borrowing from the market after a three-year pause.
Further, the public sector Nanratna company added that the loan has been tied up for a 5-year tenor and benchmarked to the Overnight TONAR (Tokyo Overnight Average Rate).
“By tapping the External Commercial Borrowing market after more than 3 years, we are not only intending to reduce our weighted average borrowing cost but also reviving our presence in the international market, which shall play a crucial role in further strengthening of the railway infrastructure that is vital for nation building.” Manoj Kumar Dubey, Chairman and Managing Director & CEO, IRFC, said in a statement.
IRFC fund utilisation plan
IRFC’s latest loan from the Japanese bank comes at a the when the company plans to foray into new territories under its IRFC 2.0 plan. The company has planned to undertake metro rail projects, railway-linked renewable energy projects and a dedicated fleet corridor segments besides its traditional Indian railways financing.
In the statement, the company elaborated that the proceeds from this facility will be utilised towards financing projects that have forward or backward linkage with the railway sector or any other project as may be approved by the company in compliance with the ECB Guidelines.
MD and CEO Dubey said that their priority is to mobilise resources from various available avenues at the most competitive rates, thereby supporting projects that are closely integrated with Indian Railways and delivering enduring benefits.
IRFC share price
On Tuesday, the Indian Railway Finance Corporation’s stock closed at Rs 116.60. The stock was down 0.42 per cent in the intra-day trade. In the last six months and 1 year, IRFC’s stock has lost17.90% and 20.83 per cent of its market value.