IFC issues a 10-year 10 billion rupee bond to increase foreign investment in India

LONDON: In what is the largest ever rupee bond to be issued on the London Stock Exchange (LSE) and also the longest issue ever for an offshore rupee bond with a maturity of 10 years, the International Finance Corporation (IFC) has issued a 10-year, 10 billion Indian rupee bond (equivalent to $163 million) to increase foreign investment in India, mobilizing international capital markets to support infrastructure development in the country.
The “Masala bonds” mark the first rupee bonds listed on the London Stock Exchange.
They are the longest-dated bonds in the offshore rupee markets, building on earlier offshore rupee issuances by IFC at three-, five-, and seven-year maturities.
Proceeds from the offering will support a forthcoming infrastructure bond issuance by Axis Bank.
IFC is a member of the World Bank.
Tarun Bajaj, joint secretary in the department of economic affairs, said “IFC is a key development partner as we continue to focus on deepening the capital markets. 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”.
George Osborne, Chancellor of the Exchequer, said “Increasing our links with India has been a personal priority for me which is why I went to see prime minister Narendra Modi earlier this year to promote our economic relations and gave my backing to the new Gandhi statue in parliament square.”
He added, “If we can create these strong financial links between our two countries as well, then the ties will be deeper still which is why I have been personally pushing for rupee bonds to be issued in the UK markets and I am delighted this is now going ahead.”
Jin-Yong Cai, IFC Executive Vice President and CEO, said this bond issue demonstrates the powerful role that capital markets can play in linking international savings to infrastructure investment. He said “The strong demand from investors signals continued momentum for the Indian economy.”
The bonds were issued under IFC’s $2 billion offshore rupee program. The bonds yield 6.3 percent.
JP Morgan is the sole arranger for the bond.
The British Government has welcomed the announcement.
The Economic Secretary to the Treasury, Andrea Leadsom said “A key part of our long term economic plan is to cement Britain’s position as the global financial centre. That’s why I’m delighted that the International Finance Corporation has started its new $ 2 billion offshore rupee programme by issuing this historic bond in London. This is an important step in strengthening the economic and financial ties that exist between the UK and India, and is exactly the sort of development that I had in mind when I launched the UK India Financial Partnership in Mumbai.”
The Exchequer Secretary to the Treasury Priti Patel, said “The IFC’s bond issue in London is testament to Britain’s position as a global financial centre. Infrastructure and financial services were two of the main areas identified for partnership between the UK and India during the recent Economic and Financial Dialogue between the Chancellor and Indian Finance Minister Arun Jaitley. Proceeds raised from the bond will be exclusively invested in India’s infrastructure. As the government’s representative for the Indian diaspora, I am pleased to have the UK front and centre in this investment in India’s future”.
Britain and India already have close economic and financial ties; since 2010 the UK has increased its exports to India by 50% and its imports from India by a third, and it is now the largest investor in India in the G20.