IFC global rupee bond nears $500 mn mark, brings new investors to Indian capital markets

Feb 07 2014, 15:02 IST
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IFC global rupee bonds are denominated in Indian rupees but settled in US dollars. (Thinkstock) IFC global rupee bonds are denominated in Indian rupees but settled in US dollars. (Thinkstock)
SummaryInvestors include asset managers and banks from United States and Europe.

IFC, a member of the World Bank Group, has increased the size of its three-year global rupee bond to Rs 30 billion (close to $500 million), attracting a new wave of international investors to India’s capital markets amid renewed uncertainty in the global economy.

The increase of Rs 7 billion, or about $112 million is the third since the bond program was launched late last year. Investors included asset managers and banks from United States and Europe. The program is designed to raise up to $1 billion to support the development of capital markets and increase foreign investment in India “Investors continue to show strong demand for global rupee bonds, despite the volatility in emerging-market currencies and the recent interest-rate increase in India,” said Monish Mazurka, IFC Director for Treasury Client Solutions.

“IFC remains committed to supporting the momentum we see in India’s capital markets and encouraging new investors to enter the rupee markets.”

IFC global rupee bonds are denominated in Indian rupees but settled in US dollars, with all principal and coupon payments made in the U.S. currency. IFC converts bond proceeds from dollars into rupees on the domestic spot exchange market, and uses the rupees to invest in the country.

Over the years, IFC has issued bonds in 14 local currencies, including the Brazilian real, the Chinese renminbi, the Nigeria naira, and the Russia ruble. IFC is often the first international or corporate issuer of local-currency bonds in a market. When issuing local-currency bonds, IFC works closely with regulators and market participants to refine the regulatory framework, encouraging greater participation in the local markets and providing a model for other international issuers.

India accounted for $4.5 billion of IFC’s committed investment portfolio as of June 30, 2013, more than any other country. In FY13, IFC invested $1.38 billion in India to achieve several strategic priorities such as promoting inclusive growth in India’s low-income states, addressing climate change, and supporting global economic integration.

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