US $ 1 Billion Global Rupee Bond Program - PIB

International Finance Corporation (IFC) Issues the first Tranche of
 US $ 161 Million Under its US $1 Billion Global Rupee Bond Program

Government in consultation with RBI and SEBI has been making concerted
efforts to strengthen India’s capital market and open-up the economy in a
 calibrated and careful manner to attract greater foreign capital flows and
 investment keeping in view the evolving macroeconomic scenario and
 financing needs of the economy.

Recently International Finance Corporation (IFC) launched
a $1 billion offshore bond program—the largest of its kind in
the offshore rupee market—to strengthen India’s capital markets.
 Under the program, IFC will issue rupee-linked bonds and use
 the proceeds to finance private sector investment in the country.
 It may be noted that the exchange rate risk on the bond is borne by the investor.
 
 On November 19, 2013 IFC issued the first tranche of US $ 161 million
under its USD 1 billion Global Rupee Bond Program.
 In the context of the renewed volatility of the Indian Rupee in recent weeks,
 this is a very good outcome and sends a positive medium to
long term message on the currency and the economy.
 


                      Salient features of the IFC inaugural tranche are as under:
 
Features
Details
Size
INR 10 Billion ($161 million)

Tenor
3 years
Coupon        
7.75% (70 bps below prevailing 3-year Indian government bond yield)
Order book
INR 20.6Bn  (approx. 2 times oversubscription).

Investor Profile
27 investors across the globe (from the US, Asia and Europe) participated in the transaction. Investors include asset managers, insurance companies, central and private banks, corporates, pension funds and real money investors.

            This pioneering bond issue has met with a tremendous response and
 the fact that it has been oversubscribed by two times compared to the targeted
 amount of $161 million, shows the attractiveness of quality Indian Rupee paper
 for global investors. In order to meet the huge need for infrastructure funding,
 it is crucial for India to develop the off-shore Rupee market as an alternative source
of dollar funding. This capital raising opens up a new conduit for mobilizing funds
 for our various development needs, including for infrastructure. The success
of this novel issue prepares the ground work for future issuances and
is an important milestone for developing both our offshore as well as
onshore debt capital markets.
 
The IFC global Rupee bond program would lead to inter-mediation of international
savings for development and help in the further development of capital markets
 in India. It will broaden the international investor base for India by attracting
 foreign investors who can invest only in very highly rated paper and/or
smaller investors who want to take Rupee exposure but are not set up to
make investments on-shore. An important objective is not only to bring in
dollar inflows but to send a signal to the international markets about
India’s economic strengths.  IFC’s offshore bond program will help bring depth
 and diversity to the offshore rupee market, help strengthening/ stabilizing
external value of rupee and pave the way for an additional source of funding
 for Indian companies. 
 
 
 
 






Comments

Popular posts from this blog

Wildlife sanctuaries in Assam

UPSC topper #3 Nidhi Gupta Congratulations - TIAS