Kerala govt entity raises Rs 2,150 crore via masala bonds

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Updated: Mar 30, 2019 6:19 AM

KIIFB is also the country’s first state government agency to access the offshore debt market.

Kerala Infrastructure Investment Fund Board, masala bonds,  Sebi, Kerala government, Singapore markets, rbiThe issue had an institutional investor anchoring the issue and saw a wide spectrum of investors ranging from asset managers, hedge funds and personal banks.

Kerala Infrastructure Investment Fund Board (KIIFB), the infra-funding body of the Kerala government, has raised Rs 2,150-crore via its inaugural masala bond issues in the London and Singapore markets. This is considered a landmark transaction in international debt capital markets, as it is the largest dual currency issue by a sub-sovereign backed entity from Asia and other emerging markets, according to KM Abraham, former Sebi member and CEO, KIIFB.

In absolute size, this is the third largest masala bond issue done by any Indian entity, after this instrument was approved by RBI in 2016. KIIFB is also the country’s first state government agency to access the offshore debt market.

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“To accommodate the significant interest from more investors, KIIFB intends to keep the subscription open for a few more days, perhaps, a week, in April,” Abraham told FE. At the final tally, amount mobilised is expected to reach Rs 2,600 crore.

The issue had an institutional investor anchoring the issue and saw a wide spectrum of investors ranging from asset managers, hedge funds and personal banks. It was priced at 9.723 % per annum. Rating agencies had awarded it only BB rating, but the highest so far given to an Indian agency. All the same, the successful closing of the deal indicates the overseas investor confidence, said Sanjeev Kaushik, deputy managing director, KIIFB.

RBI had granted approval for the masala bonds on June 2018. DLA Piper and Cyril Amarchand Mangaldas were the international legal counsel and domestic counsel respectively. Standard Chartered Bank and Axis Bank were the bankers to the issue, and Standard and Poor (S&P) and Fitch were its rating agencies.

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