The European Bank for Reconstruction & Development (EBRD) has raised ₹500 crore ($73.9 million) through ‘masala’ bonds listed on the London Stock Exchange’s main market. This is the sixth rupee or ‘masala’ bond to be issued by EBRD.
Masala bonds are rupee-denominated bonds issued in offshore capital markets, that are offered and settled in US dollars/euros to raise Indian rupees from international investors.
The EBRD bond — with a tenure of three years — has 6 per cent coupon and has been issued under its €35 billion Global Medium Term Note programme.
Jasmine Arora, Head of Primary Markets (Equity & Debt) India, LSE Group, said the EBRD masala bonds set a triple-A benchmark for offshore rupee issuances.
It once again demonstrates how this class of bonds can play a leading role in funding India's infrastructure and overall development, she said.
It also highlights how London has become the No. 1 international financial centre for masala bonds, Arora added.
Following the Reserve Bank of India's move to revise the external commercial borrowing (ECB) framework in April 2015, there has been an increasingly wider range of companies looking at London to issue rupee-denominated debt securities and a steadily growing pool of international capital ready to absorb higher level of masala bond issuance.
The years 2014 and 2015 saw increased primary market activity with 13 Indian rupee-denominated bonds listed in London by International Finance Corporation (IFC), Inter-American Development Bank and EBRD.
The first overseas rupee bonds were issued in 2013 by IFC, the World Bank Group's private sector investment arm.
In November 2014, IFC had issued 10-year ₹1,000-crore masala bonds listed on the LSE. This was the first Indian rupee-denominated bond listed by IFC in London to support infrastructure development in India and has been the longest-dated paper in the offshore rupee markets.
Recently, Harriett Baldwin, Economic Secretary to the Treasury, the UK, had said that India and Britain were engaged in making masala bonds successful in London.