IFC to invest 'Masala bond' proceeds in Axis Bank paper

IFC, part of World Bank Group, will invest proceeds of rupee bonds into Axis Bank's proposed infrastructure bonds

After Samurai and dimsum bonds becoming flavour of the market, now “masala bonds” have caught investors’ fancy in international capital market. The International Finance Corporation (IFC) has raised Rs 1,000 crore ($163 million) through rupee bonds, which it dubbed as “masala bonds”, from global investors.

IFC, part of the World Bank Group, will invest proceeds of rupee-denominated bonds into Axis Bank’s proposed infrastructure bonds.

“Masala bonds” were issued under IFC’s $2-billion offshore rupee programme. The bonds yield was 6.3 percent. J P Morgan was the sole arranger for the issuance. It will mark the first rupee bonds listed on the London Stock Exchange.

These 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 said.

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

Tarun Bajaj, joint secretary, department of economic affairs, finance ministry, said “IFC was 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.”