Adani Transmission Ltd’s Rs 500-crore Masala bonds support its financial flexibility, and the issuance is expected to deepen the market for such bonds with more entities following the suit, says Moody’s Investors Service.
A Masala bond is an Indian rupee denominated bond issued in overseas markets.
ATL’s Masala bond, which is the first to be issued by an infrastructure company, is for five years with 9.1 per cent coupon rate. The company plans to utilise the net proceeds to refinance existing bank debt.
“ATL’s Masala bond issuance broadens its funding diversity and financing channels in offshore markets”, Abhishek Tyagi, Moody’s Vice-President and Senior Analyst, said in a statement.
“The issuance of the Masala bonds provides an alternative avenue for ATL to raise debt and expand its funding base to include foreign investors looking to participate in the Indian market,” says Tyagi, adding that “with this issuance, ATL is sourcing funding without incurring currency risk, given that its revenues are denominated in Indian rupees’’.
“We expect the Masala bond market to deepen further with more issuers expected to follow ATL’s issuance.’’
In September 2015, India’s central bank —— the Reserve Bank of India —— had issued guidelines allowing Indian corporates, non—banking financial companies, real estate investment trusts and infrastructure investment trusts to issue Masala bonds.