Indian Railway Finance Corporation (IRFC) has urged the government to allow it to increase borrowing target for the fund raised through tax-free bonds for the entire FY16, says managing director Rajiv Datt. In an interview with Bhavik Nair, Datt said the company has secured the board’s approval to raise up to $1 billion through the offshore bonds. Excerpts:
What are your plans for raising funds via offshore bonds in FY16?
Our FY16 borrowing target stands at R17,655 crore. The board has also approved raising up to $1 billion through the offshore bonds, which would be a part of the financial year’s borrowing target. However, we have not finalised the amount to be raised through the offshore bonds and loans.
Apart from the dollar-denominated bonds, would you also be issuing bonds in other currencies?
In the past, we have borrowed in Yen. Whenever we have borrowed in other currencies, we had to swap it with dollar as the greenback market is a steady one. As of now, all our offshore borrowings are in dollars.
RBI, in its bimonthly policy, had allowed Indian companies to issue rupee-denominated bonds in the overseas market. Is IRFC planning to go for it?
We are interested in the rupee-denominated bonds, but we are waiting for the guidelines. As of now, we cannot say how much are we planning to borrow through it. But we would definitely be looking at it very closely.
Will you utilise the entire limit on tax-free bonds that will be allotted to you this year?
We are waiting for the allotment from the finance ministry. That is something we would like to take up on priority basis. Our borrowing target for FY16 is R17,655 crore and we have requested the government to allow us to raise the entire amount through tax-free bonds.
How much funds did you raise in FY15? Of the total borrowing, how much was raised through the bond market?
We have raised R11,000 crore in FY15. A large part of the borrowing was through internal accruals as we had surpluses. About 30-40% borrowing was via bond market.
How do you see the yield on corporate bonds panning out?
Recently, we raised R1,200 crore through short-term bonds at 7.95%. The information memorandum for issuing bonds was placed in the last week of March itself but we decided to open the bids in April because the yields were high in the fiscal-end — way above what we had anticipated. This time, I think we got very competitive rates.
LIC has committed R1.5-lakh-crore investment in the Indian Railways over next five years. How much do you think LIC will invest in IRFC bonds?
The ministry of railways cannot borrow directly from LIC. The borrowing will be under the new institutional finance that is going to be set up which will finance railway projects. The insurance company has committed R30,000 crore on a yearly basis for the next five years but this amount is over and above the R17,655 crore that IRFC is planning to borrow this fiscal. The details are being worked out by the ministry.
