Masala Bonds

News:Asian Development Bank (ADB) has listed its 10-year masala bonds worth Rs 850 crore on the global debt listing platform of India INX.

Facts:

About Masala Bonds:

  • Masala Bonds are rupee-denominated borrowings issued by Indian entities in overseas markets.
  • The objective of Masala Bonds is to fund infrastructure projects in India, fuel internal growth via borrowings and internationalise the Indian currency.

Who can issue these bonds?

  • The bond can be issued in a country and subscribed by a resident of such a country that is a member of the Financial Action Task Force and whose securities market regulator is a member of the International Organisation of Securities Commission.
  • It can also be subscribed by multilateral and regional financial institutions where India is a member country.
  • The first Masala bond was issued in 2014 by IFC for the infrastructure projects in India.

How does Masala Bonds help bond issuers?

  • As Masala bonds are issued directly in Indian rupees,the investor needs to bear the exchange rate risks. 
  • Rupee rate falls will not affect the issuer of Masala Bonds. In simpler words, as Masala Bonds are rupee-denominated bonds, the risk goes directly to the investor.

Additional information:

About India INX:

  • India INX is the country’s first international exchange, located at International Financial Services Centre, GIFT City in Gujarat.
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