IFC launches Masala Bonds to tap Japanese households

International Finance Corporation (IFC) today launched its first Uridashi Masala Bonds (Japanese bonds) to mobilise Rs 30 crore from Japanese retail investors.
The proceeds will be used for promoting private sector development in India, IFC said in a statement from Tokyo.
The three-year bond builds on IFC's pioneering Masala Bond programme, which has raised the equivalent of USD 1.7 billion from international investors so far, said the World Bank Group member.
The bonds will be settled in yen and each bond is denominated at Rs 1,00,000, the IFC said, adding that the bonds will be issued on March 30, 2016 and mature on March 29, 2019 with an annual payout of 5.36 per cent.

Masala Bonds are rupee-denominated instruments sold only to offshore investors, while Uridashi bonds are sold to Japanese household investors.
"Thriving economies depend on efficient capital markets," said Jingdong Hua, IFC vice-president and treasurer.

"Our latest bond opens up a new source of local-currency finance for businesses in India while enabling Japanese household investors to participate in the development of one of the world's fastest-growing economies," Hua noted.
IFC has played a prominent role in developing capital markets in the country, rolling out a USD 3 billion worth of rupee-denominated Masala Bonds over the past two years.
Huge overseas investor demand for rupee bonds prompted the

Reserve Bank of India to consider permitting local companies to issue rupee-denominated bonds in offshore markets.
Hua said India is the largest client country for IFC, which has a committed portfolio totaling over USD 5 billion as of June 2015. Out of this, USD1.4 billion of new investments came in FY15 alone.
Apart from strengthening local capital markets, IFC is also focused on boosting financing in infrastructure and logistics, promoting financial inclusion, and expanding access to high-quality and affordable healthcare.
IFC works with over 2,000 businesses worldwide. In FY15, its long-term investments in developing countries rose to nearly USD 18 billion.

While American i-banker JP Morgan was the sole arranger of the bonds, the Japanese brokerage Daisen Hinomaru Securities Co was the distributor.