IRFC explores some Swiss franc swap to cut dollar risk

Subscribe to enjoy similar stories. New Delhi: Indian Railway Finance Corp (IRFC) is reworking its foreign-currency borrowing mix, exploring a plan to swap part of its dollar-denominated loans into Swiss francs to limit foreign exchange losses and lower funding costs amid a free fall in the rupee against the greenback. The move reflects how the government's rail financier, which has nearly $8 billion in overseas exposure, is responding to currency volatility even as it reshapes its business beyond funding the Indian Railways.

Nearly 70% of IRFC’s forex loans are dollar-denominated and a 6% fall in the Indian rupee against the US currency over the last 12 months has prompted the company to explore these steps, chairman and managing director Manoj Kumar Dubey told Mint. “My exposure is nearly $8 billion… Of this, nearly 30% is yen-denominated and 70% is in dollars," Dubey said in an interview. “We are exploring whether some part of the dollar book can be swapped into Swiss franc because the cost there is much lower," Dubey said.

"If something comes out and plans materialize, maybe we will be looking at nearly a $1 billion conversion." The cost of dollar-denominated borrowings is now touching 8%, he said, adding that the number was earlier around 7%, he said. The company is in discussions with bankers to convert part of its dollar book into alternative currencies or rupee-linked structures to lower its interest cost and currency risk. He, however, did not name the banks, and said the talks were in a “very nascent stage".