IFC launches Rs.16-bn Masala bond

The International Finance Corp. (IFC) issued Masala bonds worth Rs.16 billion (about $250 million), attracting first time investors from Europe to the offshore rupee markets.

The three-and-half-year bonds mark the first issuance at this tenor in the offshore rupee markets by the World Bank private sector financing arm, according to a media release.

They build on previous IFC Masala bond issuances of three, five, seven and ten-year maturities, adding further depth to the offshore rupee yield curve for triple-A issuers. The bonds yield 6.45 percent.

"This is a historic time for India's capital markets, and we anticipate even greater momentum following the Reserve Bank of India's approval for Indian corporates to issue Masala debt," said IFC vice president and treasurer Jingdong Hua.

"Just today Indian Railways Finance Corporation said it plans to raise $1 billion in the offshore rupee markets. IFC stands ready to support first-time Masala bond issuers."

In response to strong investor demand, IFC increased the bond from Rs.10 billion to Rs.16 billion, the release said.

The overwhelming majority of investors are asset managers in Europe and North America.

The bond brings IFC's overall Masala bond issuances to Rs.99 billion, or approximately $1.6 billion.

IFC has also issued in the onshore rupee markets, raising Rs.6 billion in Maharaja bonds.

The IFC Masala bonds are listed on the London Stock Exchange. Proceeds of the bonds will support private sector investment in India, the release said.

IFC Masala bond summary terms and conditions:

*Issue amount: Rs.16 billion

*Pricing Date: April 23, 2015

*Settlement Date: April 30, 2015

*Maturity Date: October 30, 2018

*Coupon: 6.45 percent

*IFC Masala bond investor distribution by type: Banks/financial institutions 13 percent; fund managers 78 percent; pension funds/insurance 9 percent.

*IFC Masala bond investor distribution by region: North America 44 percent; Asia 7 percent; Europe 49 percent.