Sun Global helps HDFC mop up Rs 1k crore through masala bonds

A cashier checks Indian rupee notes inside a room at a fuel station in Ahmedabad

MUMBAI: India’s largest mortgage lender Housing Development Finance Corporation raised Rs 1,000 crore by selling rupee-denominated masala bonds reviving the bespoke funding route introduced some three years ago.

Sun Global Investments, a London-based investment banker, acted as the sole arranger for the bond sale.

The bonds offered 8.22 per cent annually with three-year maturity.

The issuance is part of HDFC’s $2.8 billion Medium Term Notes (MTN) programme listed on the International Securities Market of the London Stock Exchange.

A masala bond is a rupee-denominated bond sold to overseas investors, who will bear the currency risk, not the issuer.

Such bond sales hit a roadblock initially as it came with a 15 per cent withholding tax on investors. Later, it was slashed to 5 per cent.

Mihir Kapadia, CEO of Sun Global Investments, said, “This is another benchmark masala bond placement, continuing our association with India’s financial institutions to allow global investors the ability to access high quality Indian credit.”

The London Stock Exchange has become a global hub for masala bonds with a strong track record of supporting rupee-denominated bonds to fund India’s rapidly growing economy.

Sun Global Investments focuses on providing investment banking and capital markets solutions to corporates from emerging markets as well as helping international investors access opportunities there.