International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, has launched a $1 billion offshore bond programme denominated in Indian currency to fund private projects in the country.
“Vibrant domestic capital markets ensure access to long-term, local-currency finance for the private sector—the key engine of job creation in emerging markets,” said Jin-Yong Cai, IFC’s CEO.
IFC’s offshore bond programme, which is largest of its kind in the offshore rupee market, will help bring depth and diversity to the offshore rupee market and pave the way for an alternative source of funding for Indian companies, he said.
India accounted for $4.5 billion of IFC’s committed investment portfolio as of June 30, 2013—more than any other country. In FY13, IFC invested $1.38 billion in India to achieve several strategic priorities such as promoting inclusive growth in India’s low-income states, addressing climate change and supporting global economic integration.
Arvind Mayaram, secretary of economic affairs in the Ministry of Finance, said, “We see IFC as an important development partner. It has been contributing significantly in financing private sector projects, including public-private partnerships, in several key developmental areas. With the launch of a rupee bond in the global markets, IFC is turning a new corner. This is a new initiative for the intermediation of international savings for development in India. It will also help deepen the capital markets in India and establish an Indian rupee benchmark in the global markets.”
Over the years, IFC has issued bonds in 13 local currencies of countries such Brazil, China, Nigeria and Russia. Often, IFC is the first international or corporate issuer of local-currency bonds in a market. When issuing local-currency bonds, IFC works closely with regulators and market participants to refine the regulatory framework, encouraging greater participation in the local markets and providing a model for other international issuers.
IFC has provided over $10 billion in local-currency financing across 58 currencies using a variety of financing tools—more than any other international finance institution.
(Edited by Joby Puthuparampil Johnson)