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.
The Indian Renewable Energy Development Agency (Ireda) is likely to announce its green masala bond issuance soon for which it may commence roadshows in Hong Kong, Singapore and London as early as next week, 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. The Regulation S issue—where US investors are not allowed to participate—is likely to get priced in a matter of 10 days, a source pointed out. “We are looking at a pricing of 6.90-7% on IREDA’s Masala bonds under current market conditions,” a source said. The company is looking to raise $300 million via five-year bonds. In March this year, Ireda had issued a green bond in the domestic market to raise Rs 700 crore. If Ireda manages to issue the bonds at this pricing then it would be a very tight yield according to investment bankers. The company had hired six merchant bankers — YES Bank, ICICI Bank, Standard Chartered, HSBC, Barclays and Axis Bank — for the deal.
Ireda could not be immediately contacted to confirm the story. This is likely to be the first Masala bond issuance after about four months. In May, NHAI had issued Masala bonds 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. Prior to that, NTPC had also issued masala bonds worth Rs 2,000 crore at a yield of 7.25%. In July, the Securities and Exchange Board of India (Sebi) halted further issuance of masala bonds till foreign portfolio investors’ (FPI) investment in Indian corporate debt fell below 92%. After this notification, the utilisation limit has consistently remained above 92%. However, the firm was already in the process of requesting for approvals. FE reported in July that IREDA managed to receive the Reserve Bank of India (RBI)’s nod for its masala bond issuance.