Indian Railway Finance Corporation Ltd (IRFC), the dedicated financing arm of Indian Railways, has successfully raised ₹2,981 crore through its maiden issuance of ten-year zero-coupon bonds. The issue marks a significant milestone in India’s infrastructure financing, as zero-coupon bonds are issued at a discount and carry no periodic interest payments, with the return delivered at maturity.

Key Highlights

• IRFC raised ₹2,981 crore through its first zero-coupon bond issue to fund major infrastructure projects.
• Strong investor demand pushed bids above ₹7,500 crore, securing a competitive 6.79% yield.

IRFC reported that investor demand was strong, with bids exceeding ₹7,500 crore, against a base issue size of ₹1,000 crore and a green-shoe option of up to ₹4,000 crore. The bonds were accepted at a yield of 6.79 %, which is notably lower than the prevailing benchmark yield of around 7.15 % for AAA-rated PSUs, underscoring IRFC’s credibility and favourable market positioning.

The funds raised will be deployed for financing and refinancing key railway and allied infrastructure projects across India, reinforcing IRFC’s role as a foundational enabler in the railways’ capital-intensive expansion and modernisation. According to IRFC’s Chairman & Managing Director, this successful issuance “reaffirms the organisation’s role in supporting India’s infrastructure development and reflects continued investor confidence”.

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By tapping zero-coupon bonds, IRFC has broadened its borrowing strategy, enabling access to long-term, cost-efficient funding while avoiding periodic interest outflows. This financial innovation may also strengthen its ability to fund future large-scale projects with more favourable terms. Analysts view the transaction positively, noting that the strong subscription and comparatively low yield indicate robust investor appetite for infrastructure-focused debt and reaffirm IRFC’s status as a preferred issuer in domestic debt capital markets.