New Delhi: Indian Railway Finance Corp (IRFC) is in talks with the finance ministry to issue tax free bonds of about Rs3000 crore ($638 million) in 2010, its managing director told Reuters on Monday.
In February, the government had greenlighted the IRFC to float Rs5000 crore of tax free bonds in the fiscal year to March 2010, but the financing arm of the ministry of railways could issue only a portion of the sanctioned bonds.
“We have asked the ministry of finance for renewal... that we are expecting by the end of this month,” R. Kashyap said in an interview.
The annual railway budget for 2010/11 has allowed the IRFC to borrow Rs9120 crore, which Kashyap said could rise to over Rs10000 crore.
“Ministry of Railways for now has given this target. But the indications are, if their requirements are higher, they may want us to borrow more from the market.”
The firm is also frontloading its borrowing programme in anticipation of a rise in long term interest rates in the second half of the fiscal year and has borrowed Rs2855 crore so far in the current fiscal year.
Kashyap said the firm is looking to float taxable bonds of Rs500 crore by early July, having various tenures between 5 and 15 years, with coupon rates expected in the range of about 8% to 8.5%.
The firm also has the permission to raise $500 million from offshore markets in the current fiscal and is looking to raise up to $250 million in the first tranche by mid-July.
Kashyap said the firm has received 16 offers for the overseas fund-rasing plan, but is still to decide on the instrument.
“For ECB (external commercial borrowings), things had gone better. But then because of the European crisis, the bond market is not that favourable at the moment,” he said.
The firm is looking to complete the remaining portion of the offshore borrowing before Christmas this year, Kashyap added.