Indian Railway Finance Corporation (IRFC) is looking to raise up to R1,500 crore through secured, taxable bonds having maturity of two years, say sources.
The bidding will likely take place on April 8 after which the issue will open and close on April 10.
“Our target would be to raise funds at sub-8% levels,” said a cource in IRFC, adding the company’s borrowing target for FY16 is at R17,655 crore.
IRFC had tried to tap the bond markets earlier this month to raise around R3,000 crore through bonds with a maturity of two years, one month and two days. However, the bid was stopped due to a demand for higher yield by investors.
Bond arrangers had said that bidders sought a coupon rate in the range of 8.38 to 8.50% whereas IRFC wanted to issue the bonds below 8.27% level.
Also, since the bonds came with a maturity of less than three years, foreign investors could not participate because of an RBI restriction that states all investment by foreign porfolio investors in the debt market should be made with a minimum residual maturity of three years. Bond arrangers said this limited participation of investors had pushed the yields higher.
The company seems confident of investor-interest as the issue this time would be at the beginning of the fiscal.
“In March, there is always a liquidity crunch among investors that tends to push the yields higher. In April, it may be possible for companies to issue bonds at lower yields as there are fewer issuers,” said Ajay Manglunia, senior vice-president-fixed income at Edelweiss Securities.
IRFC had raised R2,625 crore in January through short-term maturity bonds at a coupon rate of 7.83%.
Recently, Life Insurance Corporation of India (LIC) had committed to invest R1.5 lakh crore in railway infra projects over the next five years.
Moreover, the government has also re-introduced tax-free bonds this fiscal year for projects in railways, roads and irrigation.