HDFC first Indian state-run firm to issue ‘masala bonds’

Mumbai, July 11 (IANS) Housing Development Finance Corp (HDFC) on Monday said it was the first state-run company to issue rupee-denominated debt notes, also called "masala bonds", for Rs 20 billion with the option to retain oversubscription of another Rs 10 billion.

"The corporation is the first Indian public sector issuer of synthetic rupee notes," the firm said in a regulatory filing, adding that Axis Bank, Credit Suisse and Nomura have been named the joint book-runners and lead managers for the offer.

The bonds have a fixed tenure of three years and one month. The price will be decided before Friday. The bonds are proposed to be listed on the London Stock Exchange, the company said.

"HDFC is keen to diversify its borrowing profile by tapping global investors through this issue of rupee-denominated bonds. This milestone issuance, the first of its kind, should validate the attractiveness of the instrument and set a good benchmark," said Chairman Deepak Parekh.

The rupee-denominated bonds, which are often called "masala bonds", were proposed in the first bi-monthly monetary policy of the Reserve Bank of India for 2015-16. At that time, the central bank had fixed a minimum tenure of of five years, with redemption in rupees.

According to the central bank, based on the comments received on the draft framework and in consultation with the government, it was decided to permit Indian corporates to issue rupee-denominated bonds with a minimum maturity of five years.

The waters had been tested earlier this year when International Finance Corp, a member of the World Bank Group, issued Rs 2 billion of 15-year masala bonds in March this year, marking the longest-dated offshore rupee bond.