Masala bonds News

Earlier these masala bonds used to be classified under the foreign portfolio investment limit for corporate bonds that stands at Rs 2.44 trillion.

The masala bonds are debt instruments through which designated domestic entities can raise funds by accessing overseas capital markets, while the bond investors hold the currency risk.

The first masala bonds were only issued in mid-2016, and the market still lacks the depth that would make them more attractive to foreign investors.

The National Highways Authority of India (NHAI) will soon raise Rs 5,000 crore through green masala bonds to be listed on London Stock Exchange, Union minister Nitin Gadkari said on Friday.

Reserve Bank on Thursday permitted multilateral financial institutions to invest in rupee denominated bonds popularly known as 'masala bonds' issued by Indian entities.

Having already exhausted a Rs 5,000 crore limit to issue 'masala bonds', mortgage major HDFC on Saturday said the Reserve Bank has granted it permission to raise another Rs 3,000 crore from the newly emerging route.

RBI's move to allow banks to issue masala bonds will remove obstacles for lenders in accessing additional tier I (AT1) and tier II bond capital and also widen the investors pool, says Fitch.

Market participants and analysts have hailed the Reserve Bank's measures announced today to deepen the corporate bonds market, saying the move will go a long way in developing the nascent debt space.

Reserve Bank on Thursday announced a slew of changes in fixed income and currency markets such as allowing lenders to issue 'masala bonds' and to accept corporate bonds under the liquidity adjustment facility (LAF).

HDFC Ltd's issue of Rs 3,000 crore rupee-denominated bond in overseas market is credit positive as it will help determine benchmark pricing for potential issuers including PSUs like IRFC, REC and PFC, Moody's Investors Service said Tuesday.

Private sector mortgage lender HDFC raising Rs 3,000 crore via masala bonds is expected to open the gates for other corporate peers to access this alternate source of funds, says Japanese financial services major Nomura.

Issuance of rupee-denominated masala bonds overseas is a step towards making the Indian currency global, CARE Ratings said on Thursday.

RBI on Wednesday said an entity can borrow a maximum of Rs 5,000 crore in a fiscal through issuance of rupee-denominated masala bonds overseas under the automatic route.

Bullish on India's growth prospects, International Finance Corporation (IFC) has said offshore rupee bonds can provide a new source of funding for Indian companies and they stand to benefit in the longer term from comparative pricing landscape.

European Bank for Reconstruction and Development issued the sixth rupee or `Masala Bond` at the London Stock Exchange today. The bonds are likely to raise five billion rupees (USD 73.9 million).

Leading corporate houses are likely to issue rupee-denominated offshore bonds aka 'Masala Bonds' worth USD 6 billion this year and double it to USD 12 billion next fiscal, says a report.