World-first “masala” bond launches on London Stock Exchange

Former Chancellor George Osborne, pictures at the Bombay Stock Exchange in 2010, spent several years courting Indian businesses

First ever offshore rupee-denominated “masala” bond listed by an Indian company.

London’s status as the leading global financial centre was underlined when the world’s first ever “masala” or rupee-denominated bond issued outside of India by an Indian company was listed on the London Stock Exchange on 1st August 2016.

Chancellor of the Exchequer, Philip Hammond welcomed the landmark listing by the Housing Development Finance Corporation (HDFC). HDFC is one of India’s biggest banks and India’s leading provider of finance for housing.

HDFC is the first company to issue a bond of this type and their decision to issue and list in London is a clear sign that Britain’s capital is the world’s number one financial centre. The bond raised 30 billion Indian Rupees, equivalent to 450 million US Dollars. It has a maturity of three years and an annual yield of 8.33%. It was more than four times oversubscribed, with significant interest from Asian investors. This illustrates London’s pivotal role as a strategic partner for financing investment in major emerging markets, thanks to its deep and liquid capital markets attracting a global investor base.

Philip Hammond, Chancellor of the Exchequer, said: I’m delighted that Housing Development Finance Corporation (HDFC) has chosen to list this landmark bond in London. It represents a major vote of confidence in London as the leading global financial centre and is further proof that Britain is a great place to do business.

This deal signifies a strengthening of the already close economic ties between the UK and India and paves the way for further masala bonds to be listed in the UK. It is a taste of things to come. Britain is open for business and one of the most attractive places in the world for foreign investment.

Alok Sharma, UK Minister for Asia, said: I very warmly welcome HDFC’s choice of the London Stock Exchange to list this world-first rupee bond, a clear signal of London’s standing as the leading international financial centre. The tremendous investor demand demonstrates the UK’s pivotal role in financing India’s growth and further strengthens the close economic ties between the UK and India. I am confident that this will pave the way for many more Indian companies to raise capital in London to support India’s ambitious infrastructure plans.

Delivering on the commitments of Prime Minister Modi’s historic visit to the UK, this launch reaffirms that the UK is a natural partner for India not only in our strong economic ties but also through the vibrant and 1.5 million-strong Indian diaspora in Britain.

Deepak Parekh, HDFC Chairman, said: The listing of these bonds on London Stock Exchange gives us immense pride. Besides being one of the largest stock exchanges in the world, London Stock Exchange has a rich legacy which dates back to over 300 years.

London Stock Exchange continues to distinguish itself by offering a wide range of financial instruments and enjoys unshakable trust from international investors.

While we did explore other markets for listing, the responsiveness and efficiency with which the officials at the UKLA and London Stock Exchange responded to our urgent requirements was remarkable. Considering that this was the first issue of its kind in a global financial centre by an Indian company, the authorities were forthcoming and supportive.

Nikhil Rathi, London Stock Exchange CEO, said: London Stock Exchange is honoured to host the world’s first ever Indian corporate masala bond, a landmark event for Indian finance and looks forward to building a long-term partnership with Indian issuers.

Taking advantage of the efficient listing process and tapping the global markets in London, global issuers can access a new vital channel of international finance and investors around the world without foreign exchange risk.

Economic and trade relations with India are a top priority for the UK. The UK invests more in India than any other G20 country, while India is one of the top sources of investment into the UK. India is already the fastest growing major economy in the world and is projected to be the world’s third biggest economy by 2030.

The last year has seen key milestones in the UK-India Financial Partnership including:

August 2015: First ever green masala bond listed on the London Stock Exchange by the International Finance Corporation (IFC), the private-sector arm of the World Bank.

November 2015: On a visit to the UK the Indian Prime Minister Narendra Modi announced that a railway rupee bond would be issued in London to finance the upgrading of India’s railway network.

April 2016: Piyush Goyal, Indian Power Minister, announced that $1 billion USD of rupee bonds would be listed in London by Indian public sector corporates.

June 2016: Axis Bank listed $500 million USD green bond in London, India’s first ever certified international green bond.

July 2016: HDFC issued first ever offshore rupee-dominated bonds by an Indian company on the London Stock Exchange.

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