RBI spices up Masala bond rules

摘要

The Reserve Bank of India shrugged off its conservative image for a moment last week to relax rules, allowing Indian companies to sell rupee bonds offshore. DCM bankers see the relatively lenient rules kicking off a wave of so-called Masala bonds, potentially as early as this month. At least a dozen Indian companies, including NTPC, Indian Railway Finance Co and Housing Development Finance Co, have been looking to tap this market. "Based on investor feedback, Masala bonds are a welcome instrument to give foreign investors access to the India growth story," said London-based Sumit Jamuar, CEO of SBICap (UK), a subsidiary of State Bank of India's investment banking arm. Jamuar believes the rules for the bonds will help develop a sustainable and liquid market in due course, as investor confidence builds. In keeping with draft rules published in June, Masala bonds will fall under India's external commercial borrowings, meaning companies will face limits to the total amount they can borrow. Masala issuers, however, will enjoy more flexibility in the use of proceeds and will be free from any pricing caps - a climbdown from earlier proposals of a cap of 500bp over Indian government bonds.