The FINANCIAL — IFC, a member of the World Bank Group, has increased an outstanding Maharaja bond to raise an additional 1.8 billion Indian rupees ($27 million) for infrastructure investment in India. This marks the first time a non-government issuer reissues debt securities in the domestic rupee markets.
IFC Maharaja bonds are issued under a $2.5 billion program. The bonds are listed on the National Stock Exchange of India. Proceeds of the bonds are invested to support the country’s infrastructure development.
In September 2014 IFC issued the first Maharaja bonds, setting an international triple-A benchmark for the country’s domestic capital markets. The bonds raised 6 billion rupees ($100 million) from international and domestic institutional investors.
In order to attract different types of investors, the bonds offered four tranches with different maturities: a five-year bullet bond of 1.5 billion rupees ($25 million), a 10-year bullet bond of 1.5 billion rupees, and two separately tradeable redeemable principal part (STRPPs) tranches of 3 billion rupees ($50 million), with maturities ranging from 13 to 20 years, according to IFC.
At the time, two domestic investors agreed to purchase, over a pre-agreed period of time, up to 2040 million rupees of the STRPPs, with tenors raining from 13 to 18 years. This unique structure enables IFC to match the timing of its rupee bond issuances with its funding needs for infrastructure projects.
“We see continued strong interest from investors in rupee-denominated bonds by high quality issuers such as IFC. By reissuing Maharaja bonds we are making a new contribution to the development of India’s debt capital markets, while channeling domestic savings for infrastructure investment in the country” said Jingdong Hua, IFC Vice President and Treasurer.
Chitra Ramkrishna, Managing Director and CEO, National Stock Exchange of India said: “Developing robust capital markets which lend to efficient fundraising for issuers is a strong focus for NSE. IFC re-issuing bonds will contribute to efficient secondary markets price discovery as issue size grows. We are committed to growing corporate bond markets in India as we have equity and currency markets. The NSE-IFC partnership we greatly value and will definitely take us to new heights in the near future.”
The lead arrangers for this reissue are HSBC, ICICI Securities PD, and SBI Capital Markets.