IFC sells Masala Re Bonds; raises Rs 1,000 cr for Axis Bank

The World Bank Group's development finance body IFC today raised Rs 1,000 crore through a 10-year bond, which will be invested in private sector lender Axis Bank's forthcoming infra bond issue.
Christened as 'Masala Bonds', the latest issuance is a part of the Corporation's USD 2-billion offshore rupee bond programme and will be the first such offering to be listed on the London Stock Exchange, the Washington-based developmental body said in a statement issued here.
Proceeds from the latest issue will support a forthcoming infrastructure bond issuance by Axis Bank, the statement said.
It can be noted that the country's third largest private sector lender Axis Bank is targeting to raise up to Rs 6,000 crore by March through the long term infra bond instrument issued by RBI in July.

"The IFC Masala Bonds set a triple-A benchmark for offshore rupee issuances and pave the way for more foreign investment to help meet the country's private sector development needs," said Tarun Bajaj, Joint Secretary, Department of Economic Affairs, Ministry of Finance.
Among all the rupee denominated issues till now by IFC, the latest offering has the longest maturity at 10 years, keeping in mind the needs of the longer gestation infrastructure projects, it said, adding, the others have been in the 3, 5 and 7 year buckets.

"This bond issue demonstrates the powerful role that capital markets can play in linking international savings to infrastructure investment. The strong demand from investors signals continued momentum for the Indian economy," IFC chief executive Jin-Yong Cai said.

The yield for the bonds has been set at 6.3 per cent, it said, adding that J P Morgan was the sole arranger for the issuance.
The rupee denominated bonds help deepen the process of internationalisation of the rupee and involve raising money in an international currency, which is brought onshore and converted into rupee in the domestic spot market.
The repayment will be as per the existing exchange rate of the rupee against the international currency.