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London Greets Masala Bonds

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HDFC become the first Indian corporate to launch Masala Bonds at LSE

HDFC has become the first Indian corporate to list Masala bond, chooses London Stock Exchange for landmark issuance…reports Asian Lite News. Rupee denominated bond raises INR 30 billion (USD 450 million equivalent), with 8.33% annual yield, attracting global investor support

HDFC become the first Indian corporate to launch Masala Bonds at LSE
HDFC become the first Indian corporate to launch Masala Bonds at LSE

London Stock today welcomes the world’s first Masala bond issued by an Indian corporate. The landmark bond issuance from Housing Development Finance Corp (HDFC), one of India’s leading banking and financial services companies was 4.3 times oversubscribed and paves the way for the opening of the Masala bond market globally to support Indian company and infrastructure financing.

The 37 month dated Rupee denominated bond, commonly known as a Masala bond, raised INR 30 billion, equivalent to USD 450 million, with an annual yield of 8.33% and secured global investor support. The bond will help HDFC to diversify its borrowing profile and access global investors. The listing follows Prime Minister Narendra Modi’s announcement of USD 1 billion equivalent of Masala bond issuance in the UK, made during his visit to London in 2015.

London Stock Exchange has a strong track record of supporting Masala bond issuance by supranational institutions on its markets. 30 offshore Indian Rupee bonds have listed in total on London Stock Exchange, raising equivalent to approximately USD 3.5 billion. London Stock Exchange last year saw the listing of the world’s first ever green Masala bond on its markets and there have been two further listings in 2016, raising a total of INR 7 billion, reinforcing London Stock Exchange’s position as the leading global listing venue for Rupee denominated bonds.

Indian High Commissioner Navtej Singh Sarna with Lord Rana, Sir Peter Luff, Bob Blackman MP, Virendra Sharma MP, prominent writer & researcher Victoria Schofield, leading activist Lakshmi Kaul and guests
Indian High Commissioner Navtej Singh Sarna with Lord Rana, Sir Peter Luff, Bob Blackman MP, Virendra Sharma MP, prominent writer & researcher Victoria Schofield, leading activist Lakshmi Kaul and guests (File)

High Commissioner Sarna reiterated the importance attached by Prime Minister Narendra Modi as well as the UK Government to strengthening financial business and investment links between India and the UK.

He also emphasized that the successful launch of these bonds testifies to global confidence in India’s growth story as well as to strengthen confidence of India-UK relations.

So far 30 off-shore Indian rupee bonds have been listed on the London Stock Exchange raising equivalent to US$ 3.5 billion.  Other Speakers also expressed the hope that this landmark bond issuance by HDFC would pave the way for opening of the Masala Bond market globally to support Indian companies and infrastructure financing.

“Today’s Masala bond issuance by HDFC is a world first and London Stock Exchange is proud to be the partner of choice for this landmark event for Indian finance,” said Nikhil Rathi, CEO, London Stock Exchange plc & Director of International Development, London Stock Exchange Group. “Thanks to HDFC, in particular Chairman, Mr Deepak Parekh, a vital new international channel of finance has opened up for Indian corporates and infrastructure.

“The success of this issuance shows the support of the global markets for high quality Indian companies.  Taking advantage of the efficient listing process and tapping the global markets in London, home to the deepest international investor base, Indian companies can now access international Rupee-based financing without having to be concerned about foreign exchange risks. We look forward to building this market with Indian partners and authorities over the long-term, a major success for the India-UK Financial Partnership.”

“This is a milestone transaction for HDFC. We have successfully achieved our objective  of attracting a global pool of capital to further diversify our borrowing profile,” said Deepak Parekh, Chairman, HDFC. The positive investor response towards this issuance reinforces the blue-chip positioning of HDFC, and establishes a significant benchmark for Indian companies.”

“I congratulate HDFC Ltd. for opening the Masala Bond market,” said Shikha Sharma, Managing Director & CEO of Axis Bank. The success of this debut Masala bond deal can be clearly attributed to the International standing of HDFC Ltd. along with the unparalleled investor access offered by the LSE. I expect this deal to be a milestone in making the overseas markets easily accessible to Indian Issuers and acting as a catalyst in deepening the Indian Bond markets. Being the Joint Lead Manager on this prestigious deal is a very proud moment for us and highlights the position of Axis Bank as a market leader in Indian Capital Markets.”

HDFC’s bond listing is the latest in a long line of global firsts for London Stock Exchange Group, including numerous high profile Rupee denominated bond issuances on London Stock Exchange:

  • June 2016 – Axis Bank lists India’s first internationally listed certified green bond & its entire USD 5 billion MTN programme
  • June 2016 – first Chinese sovereign RMB bond issued outside of China lists in London, bringing total number of offshore RMB bonds issued in 2016 alone in London to 54, more than all other offshore RMB markets combined
  • August 2015 – International Finance Corporation (IFC) issues world’s first offshore green Masala bond, raising GBP31 million equivalent
  • February 2014 – IFC lists first Rupee denominated bond, going on to issue a further 3  Masala bonds in London over 2 years