Indian Railway Finance Corporation raises $500 million through greenback issuance

Indian Railway Finance Corporation (IRFC), the financial arm of Indian Railways, issued $500 million of denominated, senior, unsecured green notes under its $7 billion global medium-term note program.

The greenbacks will have a term of ten years and a coupon rate of 3.57%. The Notes are listed on India International Exchange (IFSC) Limited and NSE IFSC Limited and rated Baa3 by Moody’s Investor Services.

The company will use the proceeds to finance eligible green assets through a leasing model. Alternatively, it will be used to refinance current debt of eligible green assets under its “Green Financing from Green Debt Framework”, in accordance with applicable laws, including India’s External Commercial Borrowing Guidelines .

In March 2021, Union Railways Minister Piyush Goyal said that the entire Indian railway network would be fully electrified by 2023 and run on renewable energy by 2030. Addressing the Summit India Maritime 2021, he said Indian Railways had moved 1.1 billion metric tons of freight traffic as of February 28, 2021.

Earlier, the Ministry of Railways announced that Indian Railways plans to develop 20 GW of solar projects on its vacant land to help meet the projected consumption needs of over 33 billion units (BU) of 2030.

According to a report by Climate Trends and Riding Sunbeams, one in four trains on Indian Railways could be powered by solar energy. The report says solar projects installed along electrified railways could replace around 4 GW of coal-fired power and save 20% of Indian Railways’ annual electricity bills in the first year and 40% thereafter.

In 2019, IRFC signed an agreement with the Asian Development Bank to electrify the railways. The AfDB said it would provide $750 million in long-term financing to help India’s railway sector transition to electric power and move away from reliance on fossil fuels.

Mercom previously announced that IRFC has raised $500m (~₹32.07bn) by issuing its first green bond on the London Stock Exchange’s New International Securities Market. The bond was more than three times oversubscribed, indicating strong support from global investors.

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