Indian Railway Finance Corporation (IRFC) today said it might hit the market with a tax-free bond issue next week. It also said that it would maintain around 20 per cent growth in market borrowings for the next three years.
The government has allowed IRFC to issue Rs 5,000 crore of tax-free bonds by March 2010. These bonds will carry interest rate in the range of 6.50-7.25 per cent.
The corporation had revised the borrowing target for 2009-10 to Rs 9,500 crore from Rs 9,170 crore after the government allowed it to raise funds through a tax-free instrument, Managing Director R Kashyap said on the sidelines of Fitch India’s annual debt seminar today.
Another IRFC official said the finance ministry had indicated that the government might allow the corporation to issue tax-free bonds in the next financial year too. The corporation is yet to appoint an arranger to the issue and the bonds would have tenures of five, seven and 10 years. “It can raise Rs 5,000 crore, but have to see investors’ appetite,” Kashyap added.