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MUMBAI : The Indian Railway Finance Corporation (IRFC) has raised funds at 18 basis points lower than that offered by sovereign bonds.

The financing arm of the Indian Railways has raised 1,375 crore through 20-year bonds at 6.8%. A government paper maturing in 2041 offers an annualised yield of about 6.90%.

“The aforesaid bond issuance received very good response from investors comprising long term/ultra-long-term investors primarily including provident funds. The issue was oversubscribed by six times compared with the base issue size of 500 crore," according to a statement by IRFC.

The strong investor response to the bond issuance followed IRFC cancelling plans to tap the bond market earlier this month due to insufficient demand as G-sec yields had shot up at that time. IRFC has a borrowing target of more than 1 trillion for this fiscal.

Typically, corporate bonds in the domestic market are liquid with a tenor of up to 10 years. The latest issuance by IRFC could set a new benchmark yield curve for pricing similar bonds in the future.

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