IRFC Raises $500 Million in its Debut Green Bond on the London Stock Exchange


The Indian Railways Finance Corporation (IRFC) has raised $500 million (~₹32.07 billion) through the issuance of its first green bond on the London Stock Exchange’s new International Securities Market. The bond was oversubscribed by more than three times, indicating strong support from global investors.

“Our debut green bond is a significant milestone for IRFC, supporting the company’s ambitious infrastructure green projects, which includes procurement of rolling stocks electrifying rail tracks across India,” said S. K. Pattanayak, managing director of IRFC.

IRFC is the financing arm of the Indian Railways, the backbone of India’s economy. It raises funds from both domestic and international capital markets.

The ten-year bond carries an annual coupon rate of 3.835 percent and it was certified by the Climate Bonds Initiative, an international investor-focused non-profit organization. The bond is helping IRFC to increase its investor base.

IRFC will use the bond proceeds to finance or refinance infrastructure for dedicated freight railway lines and public passenger transportation. The bond is significant because it demonstrates Prime Minister Narendra Modi’s commitment to funding India’s infrastructure through the issuance of over £1 billion (~₹85 billion) worth of Masala Bonds.

“There is an undeniable shift in momentum in the green and sustainable financing across the globe” said Nikhil Rathi, chief executive officer of the London Stock Exchange.

Rathi added, “I am honored to celebrate this landmark transaction with the managing director and director of finance of IRFC. Today’s green bond listing is a significant milestone for India and IRFC, allowing the country to further tap a dynamic and new international channel of finance for Indian infrastructure. In particular, we are honored to support the financing of the Indian Railways, the heartbeat of the Indian economy.”

The green bond is the second issued by an Indian institution on the London Stock Exchange’s International Securities Market in December 2017. Earlier this month, the Power Finance Corporation, an undertaking of the government of India, issued green bonds worth $400 million (~₹25.72 billion).

Image credit: Challiyan at Malayalam Wikipedia [CC BY-SA 3.0], via Wikimedia Commons