International Finance Corporation (IFC), an part of the World Bank group launched its first Uridashi Masala bonds ( Japanese Bonds ) to mobilize R30 crore (or $4.3 million) directly from Japanese household investors to promote private sector development in India.
The 3 year bond builds on IFC’s Masala bond program which has raised the approx $1.7 billion from international investors for investment in India. Masala bonds are rupee denominated instruments sold only to offshore investors, while Uridashi bonds are sold to Japanese household investors. The steps from IFC’s Uridashi Masala bonds will be used to support private sector investment in India. JP Morgan is the sole arranger of the bonds and Daisen Hinomaru Securities is its distributor.
So the question arise – What are masala bonds?
Masala bonds are rupee denominated instruments sold only to offshore investors by Indian corporate for raising money from overseas investors. They do not face currency fluctuation risks and basically bonds are instruments of debt that are typically used by corporate to raise money from investors.
Corporate 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.
In August 2015, IFC became first entity to issue a Green Masala bond on the London Stock Exchange. In India, IFC mainly focuses on boosting financing in infrastructure and logistics, promoting financial inclusion, and expanding access to high-quality and affordable healthcare.
Extra Info :
IFC Headquarter : Washington, D.C., United States
IFC CEO: Jin-Yong Cai
Founded In : 1956
Parent organization: World Bank Group
So Lets discuss some questions about this post which can be asked iin the upcoming exams :
1. Name the organisation which has launched masala bonds recently ?
2. Expand the term IFC & ECBs .
3. Name the 2 company who is the only arranger and distributor of the bonds in India?
Courtesy : Economic Times