Indian Railway Finance Corporation (IRFC) is looking to raise up to Rs 1,800 crore through a private-placement of tax-free bonds with a tenure of 10 years, sources close to the development said.
“The bonds will have a coupon rate of 7.19% and the base size of the issue will be Rs 500 crore with a greenshoe option of Rs 1,300 crore,” a source indicated adding that IRFC is seeking bids from arrangers on Tuesday.
IRFC has been allotted a limit of Rs 6,000 crore through tax-free bonds in the fiscal year 2016. According to the government notification, at least 70 % of the total amount has to be raised through public issue while the rest can be raised through private-placement. Market participants indicated the public issue of tax-free bonds is likely to commence in August.
Bond arrangers said that Housing and Urban Development Corporation (HUDCO) is also likely to tap the bond market soon to raise Rs 1,500 crore through 10-year tax-free bonds with a coupon rate close to 7.19%.
HUDCO has been allotted a limit of Rs 5,000 crore on tax-free bonds.
Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) have recently issued 10-year tax-free bonds to raise Rs 300 crore each at coupon rates of 7.16% and 7.17% respectively.
In the regular corporate bond market, Nuclear Corporation of India (NPCIL) has called for bids from arrangers on Wednesday.
NPCIL is looking to raise between R2,500-R3500 crore through long-term bonds, according to sources.
National Highways Authority of India (NHAI), Indian Renewable Energy Development Agency (IREDA), and NTPC are the other companies that have been permitted to issue tax-free bonds this fiscal. NHAI has been allotted the largest amount at Rs 24,000 crore, IREDA has been allowed Rs 2,000 crore while NTPC can raise Rs 1,000 crore through tax-free bonds this fiscal.