The Indian Railway Finance Corporation (IRFC), the finance arm of Indian Railways, will commence roadshows for its green dollar bonds in Hong Kong, Singapore and London beginning Thursday, sources aware of the deal told FE. “The roadshows for the Reg S bonds will continue till Monday and the issue is likely to be priced next week,” said an investment banker. A Reg S issue is one in which US investors do not participate. The funds raised will be used for capital expenditure, said the banker. Earlier, IRFC had hit the dollar bond market in February 2014 when it raised $500 million through a five-year paper at a coupon rate of 3.917%, according to Bloomberg data. The forthcoming bonds will have a tenor of 10 years. Since IRFC is a 100% government owned entity, bankers say these bonds are likely to be priced at a better spread than some of its PSU peers.
“The spread on IRFC’s bonds will be tighter by at least 25-30 basis points compared to some of the other PSUs,” said an investment banker. Moody’s Investors Service has assigned a Baa2 rating to IRFC’s proposed green bonds. The rating outlook is stable, it said in a release. Post the sovereign ratings upgrade, Moody’s had hiked the long-term ratings of IRFC to Baa2 from Baa3 while changing the ratings outlook to stable from positive. Barclays, HSBC, Standard Chartered and MUFG are the bankers to the deal.
Post the IRFC issue, Rural Electrification Corporation (REC) is also set to hit the dollar bond market, sources aware of the matter told FE. REC had already picked up $450 million in July this year by issuing 10-year dollar bonds at a coupon rate of 3.875%. The week saw heightened activity by Indian firms in the overseas bond market. Both, Lodha Developers International and Power Finance Corporation, closed their respective dollar bond issues. So far, Indian companies and banks have raised over $13.5 billion from the overseas bond market this year and the figure is likely to cross the $14 billion mark once the bond offerings by IRFC and REC are concluded.