What's Happening?
Indian Railway Finance Corp (IRFC) has decided to withdraw its planned issuance of deep-discount zero coupon bonds, which were set to mature in 10 years. The decision was made after receiving higher coupon bids than anticipated, according to three bankers.
The state-run company had initially planned to raise up to 50 billion rupees, equivalent to approximately $554.55 million, through this bond issue. The withdrawal comes after IRFC invited commitment bids earlier in the day. As of now, IRFC has not responded to inquiries from Reuters regarding the withdrawal.
Why It's Important?
The withdrawal of the bond issue by IRFC highlights the challenges faced by state-run companies in securing favorable terms in the bond market. High coupon bids can increase the cost of borrowing, making it less attractive for companies to proceed with bond issuances. This development may impact IRFC's financing plans and could lead to adjustments in their strategy to raise capital. The decision also reflects broader market conditions where investors demand higher returns, potentially affecting other issuers in the region. The move could influence the perception of risk associated with Indian corporate bonds, affecting future issuances.
