IFC reissues Rs 180 cr maharaja bonds

This is the first reissue of an Indian corporate bond ever

The International Finance Corporation (IFC) on Tuesday reissued Rs 180 crore of its rupee-denominated bonds, known as maharaja bonds, marking the first reissue of an Indian corporate bond ever.

According to sources, it happened in the 13-18 years segment and the investors were SBI Life Insurance and HDFC Life Insurance. They were also the original investors in the initial round of this bond. The coupon of the bond is 8.88 per cent, but the reissue happened at 8.36 per cent, sources said, indicating the buyers paid a premium for the bonds.

The lead arrangers for this reissue were HSBC, ICICI Securities PD and SBI Capital Markets. While the total bond programme is of $2.5 billion, IFC in September had raised or tied up commitments for Rs 600 crore. The bonds were issued under four tranches - five-year, 10-year, and two bonds maturing in 13-20 years.

Through the five- and 10-year bonds, IFC had raised Rs 300 crore while only 10 per cent of the longer tenure bonds were raised that time. On Tuesday, IFC raised Rs 183.6 crore through investors in the 13-18 years bond segment, sources said. But being the first reissue of corporate bonds, it assumes significance and may help Indian firms think of reissuing their bonds instead of issuing different bonds.

"We have been advising Indian firms not to have separate bonds but go through the reissue route, so that there are fewer bonds to keep track, but firms probably do not want to bunch up their redemption," said N S Venkatesh, executive director of IDBI Bank and chairman of Fixed Income Money Markets and Derivatives Association of India.

"IFC's reissuance will encourage Indian companies to follow a similar route," Venkatesh said.