Even as the Reserve Bank of India (RBI) separated masala bonds from the foreign portfolio investors’ investment limit in corporate bonds, three firms — Indian Renewable Energy Development Agency (IREDA), National Highways Authority of India (NHAI) and HDFC — are looking to raise funds via masala bonds, sources aware of the development have confirmed to FE. A masala bond is a rupee-denominated bond issued in the overseas market. NHAI is believed to be looking to raise between Rs 3,000 and Rs 5,000 crore via masala bonds that are likely to have a tenure of five years. “The work is in progress and NHAI might approach the market over the next two months,” said an investment banker.
The firm had issued masala bonds in May to raise Rs 3,000 crore at a yield of 7.30%. The bonds were listed on the London Stock Exchange and had seen considerable interest from the insurance and banking sector. Sources also indicated the Indian Renewable Energy Development Agency (IREDA) has commenced roadshows for its masala bond issue. The company is looking to raise $300 million via five-year paper for which roadshows are being held in London, Singapore and Hong Kong.“The issue is likely to get priced on Thursday. We are expecting a yield close to 7%,” said a source close to the deal.
The central bank on Friday had excluded masala bonds from the FPI limit for corporate bonds with effect from October 3. This comes after the Securities and Exchange Board of India (Sebi) in July halted all masala bond issuances till FPI utilisation of debt limits fell below 92%. Since there are no prescribed limits on masala bonds, bankers believe more issuers might approach the RBI to tap the overseas market for their funding requirements.“With the separation of the limits, we could see many public sector units approaching the central bank, especially from the power sector,” said another banker. At the same time, HDFC is also understood to be in talks with the International Finance Corporation (IFC) to raise close to $200 million via private placement of its masala bonds. Last year, the firm had issued masala bonds worth Rs 3,000 crore, which saw considerable response from investors.