The Indian Renewable Energy Development Agency (Ireda) is believed to have priced its green masala bonds at 7.23% to raise close to $300 million, sources aware of the deal have confirmed with FE.
The Indian Renewable Energy Development Agency (Ireda) is believed to have priced its green masala bonds at 7.23% to raise close to $300 million, sources aware of the deal have confirmed with FE. A masala bond is a rupee-denominated bond issued in the overseas market. A green bond is used to raise money to fund green projects. Ireda’s masala bonds have a tenure of five years. “This issue marked a successful re-opening of the masala bond market. It saw widespread participation from existing masala bond investors and many new investors as well. The pricing saw seven basis points tightening from the initial price target of 7.30%,” said a banker close to the deal.
According to another source, the issue received bids worth over $500 million. “The coupon rate on the issue stood at 7.125% while the yield stood at 7.23%,” the source pointed out. YES Bank, ICICI Bank, Standard Chartered, HSBC, Barclays and Axis Bank were the bankers to the deal. This is the first masala bond issue after the Securities and Exchange Board of India (Sebi) in July halted issuance of these bonds till foreign portfolio investors’ (FPI) investment in Indian corporate debt fell below 92%. Last week the Reserve Bank of India (RBI) placed the masala bonds under external commercial borrowing norms by separating it from the FPI investment limit in corporate debt, thereby paving way for further issuances in this segment.
Ireda’s issue is coming after a period of almost four months. Earlier, NHAI had issued masala bonds in May which were priced at 7.30%. The bonds got listed on the London Stock Exchange and had seen considerable interest from the insurance and banking sector. Asian investors showed considerable interest followed by investors in Europe. Before that, NTPC had also issued masala bonds worth `2,000 crore at a yield of 7.25%.