‘Masala bonds’ are being rolled out to the international wealth manager marketplace for the first time following the joint initiative between London-based Sun Global Investments, Dubai-based Emirates NBD Bank and ECL Finance, a part of the India-based Edelweiss group.
The first international offering of Indian Rupee denominated, US dollar settled, Senior Secured Notes offering (also commonly referred to as Masala bonds) of Rs 5.02bn (US$75m), has been issued today, according to a joint statement released earlier today.
Sun Global Investments and Emirates NBD Bank were the global coordinators were joint lead managers for the issuance, the statement read.
The issue proceeds of these Reg S type Masala bonds, that have a tenor of 3 years and 2 months, will be used for repayment of existing debts, supporting growth and other general corporate purposes as permitted under the applicable regulations. The bonds are governed by UK law and are listed on the Singapore Stock Exchange. It is proposed that the bonds will also be listed on the Stock Exchange of Mauritius.
As India Inc. looks at newer channels to fund its growth, the Masala bond market opens up a route for overseas investors to participate in the Indian debt market. Using this route, domestic issuers can continue to fund themselves in their operating currency, without adding foreign exchange risks to their local balance sheets, ECL Finance said.
International wealth managers
Masala bonds allow international institutional investors and wealth managers direct access to Indian credit opportunities without having to establish special entities and gain special regulatory approvals and appoint settlement agents onshore.
Sun Global Investments is an active participant in the primary and secondary fixed income markets segments across UK, Europe & Asia, with teams in London and Dubai and has used its experience in India to work with ECL Finance on its debut issuance of Masala Bonds to international investors.
Mohair Kapadia, chief executive, Sun Global Investments said: “We believe this issuance assists the company in further diversifying its funding sources, and building a profile with international fixed income investors.”