IFC Launches Innovative Masala Bond to Mobilize Japanese Savings for India’s Private Sector

IFC, a member of the World Bank Group, launched its first Uridashi Masala Bond, mobilizing 300 million rupees (or $4.3 million) directly from Japanese household investors to promote private sector development in India. 

The three-year bond builds on IFC’s pioneering Masala bond program, which has raised the equivalent of $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. Proceeds from IFC’s Uridashi Masala bonds will be used to support private sector investment in India. 

“Thriving economies depend on efficient capital markets,” said Jingdong Hua, IFC Vice President and Treasurer. “IFC’s latest bond opens up a new source of local-currency finance for businesses in India while enabling Japanese household investors to participate in the development of one of the world’s fastest-growing economies.” 

IFC has played a prominent role in India’s capital-markets development, rolling out a $3 billion rupee-denominated Masala bond program over the past two years. IFC has issued bonds in a sufficient range of maturities to establish a sound benchmark for rupee bond prices. The resulting investor demand for rupee bonds prompted the Indian central bank to consider permitting local companies to issue rupee-denominated bonds in offshore markets. 

J.P Morgan is the sole arranger of the bonds. Daisen Hinomaru Securities Co. Ltd is the distributor of the bonds. 

India is IFC’s largest client country. IFC's committed portfolio in India totaled more than $5 billion as of June 30, 2015. In fiscal year 2015, IFC committed $1.4 billion in new investments. In addition to strengthening local capital markets in India, IFC is focused on boosting financing in infrastructure and logistics, promoting financial inclusion, and expanding access to high-quality and affordable healthcare. 

Summary Terms of IFC Uridashi Masala Bond

Issuer                        International Finance Corporation 

Currency                    Indian Rupee                                           

Settlement Currency   Japanese Yen 

Issue Amount             INR 300,000,000 (approximately $4.3 million) 

Denomination             INR 100,000 

Uridashi Period           March 1, 2016 – March 30, 2016

Issue Date                 March 30, 2016 

Maturity Date             March 29, 2019 

Coupon rate               5.36% p.a.