IFC issues $163M ’masala’ bonds in London for funding Indian infrastructure

International Finance Corporation (IFC), the private sector investment arm of the World Bank, has issued a 10-year, Rs 1,000 crore ($163 million) Indian rupee bond to increase foreign investment in India, mobilising international capital markets to support infrastructure development in the country, according to a press release.

The bonds were issued under IFC’s $2 billion offshore rupee programme with carry yield of 6.3 per cent. The majority of investors participated from European insurance companies.

Proceeds from the offering will support a forthcoming infrastructure bond issuance by Axis Bank.

The Masala bonds is the first rupee bonds listed on London Stock Exchange and marks the longest-dated bonds in the offshore rupee markets. Earlier IFC issued offshore bonds for three-, five- and seven-year maturities.

“This bond issue demonstrates the powerful role that capital markets can play in linking international savings to infrastructure investment. The strong demand from investors signals continued momentum for the Indian economy," said Jin-Yong Cai, executive vice-president and CEO, IFC.

“The IFC Masala bonds set a triple-A benchmark for offshore rupee issuances and pave the way for more foreign investment to help meet India’s private sector development needs," said Tarun Bajaj, joint secretary, department of economic affairs, India.

JP Morgan acted as the sole arranger for the latest issuance.

Earlier this year, IFC an additional Rs 700 crore as the fourth tranche of its $1 billion global rupee-denominated bonds.

Last October, IFC had launched a $1 billion offshore bond programme denominated in Indian currency to increase foreign investments and fund private projects in the country.

After completing the $1 billion offshore bond issue early this year it had charted out plans for a bigger $2 billion offshore bond programme.

Over the years, IFC has issued bonds in 14 local currencies, including the Brazilian real, the Chinese renminbi, the Nigeria naira and the Russia ruble. IFC is often the first international or corporate issuer of local-currency bonds in a market.

(Edited by Joby Puthuparampil Johnson)

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