IFC launches Uridashi Masala Bonds
The International Finance Corporation (IFC), the investment arm of the World Bank has launched its first Uridashi Masala Bonds (Japanese bonds).
These masala bonds were launched to mobilise 30 crore rupees from Japanese retail investors and will be sold to Japanese household investors.
The proceeds from these bonds will be used for promoting private sector development in India. JP Morgan is the sole arranger of the bonds and Daisen Hinomaru Securities is its distributor.
What are masala bonds?
- Basically, bonds are instruments of debt that are typically used by corporates to raise money from investors.
- Masala bonds are rupee-denominated instruments sold only to offshore investors by Indian corporates for raising money from overseas investors. They do not face currency fluctuation risks.
- Corporates mainly use it as alternative to external commercial borrowings (ECBs) that are to raised and repaid in dollar or other currency terms. But ECBs face currency risk due fluctuations in exchange rate.
International Finance Corporation (IFC)
- It is an international financial institution that offers investment, asset management and advisory services to encourage private sector development in developing countries.
- India is IFC’s largest client country which has played a prominent role in country’s capital-markets development.
- In India, IFC mainly focuses on boosting financing in infrastructure and logistics, promoting financial inclusion, and expanding access to high-quality and affordable healthcare.
- In August 2015, IFC became first entity to issue a Green Masala bond on the London Stock Exchange.