The lease tenor is long, in line with the life of the assets that IRFC leases. IRFC leases assets for 30 years with a primary lease period of 15 years, but its borrowings are of shorter tenure. IRFC has in ’ the last few years increased the maturity profile of its borrowings through a mix which includes tenors ranging from 5-15 years. Moreover, there is a covenant in the lease agreement, whereby the MoR undertakes to make advance payments to IRFC should the latter fall short of funds to service its debt obligations.
Under the agreement, IRFC is also insulated from any interest rate or exchange risks as its lease agreements with the Indian Railways provide that any benefit or loss on account of interest rate or exchange rate fluctuations shall be fully passed on to the latter.