Kerala to go for Rs 1,500-cr masala bond

By: | Published: September 22, 2018 12:26 AM

Kerala’s infra fundraising arm KIIFB (Kerala Infrastructure Investment Fund Board) will go for Rs 1,500-crore masala bond in London in October, as part of its Rs 5,000-crore global MTN (Medium Term Note) programme.

Kerala to go for Rs 1,500-cr masala bond

Kerala’s infra fundraising arm KIIFB (Kerala Infrastructure Investment Fund Board) will go for Rs 1,500-crore masala bond in London in October, as part of its Rs 5,000-crore global MTN (Medium Term Note) programme. The MTN programme has been filed, both at London Stock Exchange and Singapore Stock Exchange, says Kerala Finance Minister T M Thomas Isaac.

It would be the first time that an Indian state is approaching international markets to raise resources for development and completing MTN procedures to do this, Isaac said.

Rating agencies Standard & Poor and Fitch have recently assigned both KIIFB and its MTN programme with a long-term foreign currency rating of BB with ‘stable’ outlook. KIIFB is uniquely positioned to access international bond markets owing to the strong support it enjoys from the Kerala government and its ring-fenced stream of cash flows, KM Abraham, CEO, KIIFB told FE.

The new rating acknowledges Kerala government’s role as guarantor to debt issuance of KIIFB.

Since masala bonds are rupee-denominated, the payback to the investment will be in rupee, not dollar. So the weakening of the rupee would not add to the issuer’s debt, he said.

Ahead of floating the masala bonds, Kerala government intends to make a presentation on the prospects of KIIFB in London, Singapore, Hong Kong and Dubai. The state is likely to bide its time for the rupee to stabilise within a reasonable range, before floating the bonds in West Asian markets.

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