KIIFB's masala bonds: Roadshow in London, HK, Dubai and Singapore this month

Though KIIFB had plans to raise Rs 5,000 crore through masala bonds, RBI approved only Rs 2,650 crore in the first tranche.

Published: 09th November 2018 01:24 AM  |   Last Updated: 09th November 2018 09:29 AM   |  A+A-

Rs 2000, cash,money

For representational purposes (File | Reuters)

By Express News Service

KOCHI: The roadshows for Kerala Infrastructure Investment Fund Board’s (KIIFB) much-awaited Rs 2,650-crore masala bonds -- the rupee-denominated borrowings directly pegged to the Indian currency - will take place this month, after several postponements.

Senior officers of the Finance Department and KIIFB, including Sanjeev Kaushik, principal secretary (finance-resources), along with the bankers will travel to Singapore, Dubai, London, and Hong Kong for the roadshow scheduled from November 14. Earlier, the roadshow was planned for September and later October.

“We have already registered with both Singapore and London stock exchanges. We will know the interest rates during the roadshow after getting to know the investor appetite,” said a senior KIIFB officer. Though KIIFB had plans to raise Rs 5,000 crore through masala bonds, RBI approved only Rs 2,650 crore in the first tranche. K M Abraham, CEO and member secretary, KIIFB and Kaushik had earlier travelled to some cities as part of the rating exercise for masala bonds recently. Global rating agency S&P Global had given BB rating for the masala bonds, which will have a five-year tenure.

Since the debt instrument is directly pegged to the Indian currency, investors will directly take the currency risk or exchange rate risks. If the value of Indian currency falls - this year the rupee fell nearly 13 per cent -- the foreign investor will have to bear the losses, not the issuer which is an Indian entity and in this case KIIFB. “That’s the beauty of masala bonds,” the KIIFB officer said.

Axis Bank and Standard Chartered Bank are the bankers for the issue. KIIFB will use the funds raised for funding infrastructure projects in the state. The infra funding arm has approved a total of 367 projects requiring a total investment of over Rs 22,000 crore.

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