1. HDFC may be 1st Indian company to issue masala bonds, set to raise $750 mn

HDFC may be 1st Indian company to issue masala bonds, set to raise $750 mn

NTPC, IRFC, PFC & IIFCL also gearing up for their masala bond issuances

By: | Mumbai | Updated: November 19, 2015 12:02 PM
HDFC

Barclays, HSBC, JP Morgan, Citi and Credit Suisse are the bankers to the HDFC deal, according to sources. (Reuters)

Masala bonds or rupee bonds are likely to be priced either 50 basis points higher or 50 basis points lower than the borrowing rate which the corporate enjoys in the domestic market for a matching tenure, investment bankers managing the issuances said.

Housing Development Finance Corporation (HDFC) might be the first Indian company to issue offshore rupee-denominated bonds or masala bonds even as investor meetings are on in Singapore, Hong Kong and London, sources close to the development said.

Currently, HDFC borrows at around 8.30-8.35% in the domestic market for a tenure of five years. “While the company would like to raise funds at 50 basis points below the domestic rate, a realistic rate will be the domestic rate while investors would expect 50 basis points higher than that,” explained a senior banker.

The currency risk lies with investors which is why they will try to get the best rate, bankers pointed out.

The company is looking to raise as much as $750 million, but bankers said the issuance may happen in tranches. The tenure of the bonds is likely to be five years, sources said, adding that the issuance is likely to be completed in the next few weeks.

Barclays, HSBC, JP Morgan, Citi and Credit Suisse are the bankers to the HDFC deal, according to sources.
Rupee-denominated bonds have suddenly come into the limelight, with many companies now looking to raise funds through this route. Apart from HDFC, NTPC, IRFC, PFC and IIFCL are also gearing up for their masala bond issuances.

Indian Railway Finance Corporation (IRFC) has already floated an RFP for appointing bankers for its masala bonds, while India Infrastructure Finance Company is looking for lead managers for its rupee-denominated bond issuance, according to a statement on the company’s website.

Power Finance Corporation (PFC), which was earlier trying to issue dollar-denominated bonds, is now looking to issue masala bonds, according to sources.

International Finance Corporation, a member of the World Bank Group, recently issued R170 crore worth of rupee-denominated bonds — at a yield of 6.5% — as part of its strategic support to Indian companies which are preparing to issue rupee-denominated bonds in offshore markets.

Tags: HDFC
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