Indian Railway Finance Corporation (IRFC) today raised USD 500 million through a five-year international bond sale at a coupon of 3.917 per cent, making it the second dollar bond sale by the company.
The five-year bonds were priced at 245 basis points over the benchmark 5-year US treasury, the company said.
The issue had an initial price guidance of 265 basis points area over the US treasury but came down to 245 due to demand reaching over USD 3 billion.
IRFC had last accessed the US dollar denominated capital markets in 2012 with a USD 300 million bond offering.
Deutsche Bank India, lead manager to the issue, said this is the first quasi-government institutional offering in 2014 and the issue was oversubscribed six times.
Many global fund managers participated in the transaction with fund managers accounting for a vast majority at around 76 per cent of the final allocations.
Banks, insurance, pension funds and private banks accounted for approximately 14 per cent, 6 per cent and 4 per cent, respectively.
In terms of geographical allocations, approximately 54 per cent of bonds went to European accounts, 38 per cent to Asian accounts, and the remaining 8 per cent to offshore US accounts, according to lead arranger Deutsche Bank India.
"I am extremely pleased with the outcome. The investors rightly recognised the rarity value of our credit, our unique business model and IRFC's status of being the closest proxy to the Indian sovereign," IRFC Managing Director Rajiv Datt said.
The proceeds will be used to finance the acquisition of rolling stocks leased to the railway ministry.
The bonds are expected to be issued and settled on February 26, 2014. They will be listed on the Singapore Stock Exchange.
The bonds have a Baa3 rating by Moody's, BBB- by S&P and BBB- by Fitch.
Lead managers to the issue were Australia and New Zealand Banking Group, Barclays, Deutsche Bank and the Royal Bank of Scotland.
