Four rupee-denominated bonds worth a total of 600 million pounds ($748 million) are expected to be listed in London in the next three months, the British government said on Monday, as Prime Minister Theresa May began a two-day visit to India.
- Four rupee-denominated bonds are expected to be listed in London
- Bonds are worth a total of 600 million pounds
- Bonds will be issued by Indian government-backed corporates
The latest four bonds will provide financing to expand India's highway and rail networks and meet its plans to boost energy efficiency and renewable energy, the government said.
They will be issued by Indian government-backed corporates Indian Railway Finance Corporation, Indian Renewable Energy Development Agency, Energy Efficiency Services Limited, and National Highways Authority of India by the end of January 2017.
"This is a vote of confidence in India's growth story. And it is a vote of confidence in London as world's leading financial centre," the British PM said.
May has said she wants to use the trip to India, her first bilateral visit to a non-European Union country since taking office in July, to boost ties between the countries and pave the way for a post-Brexit trade deal.
The government said that since July, more than 900 million pounds of so-called masala bonds have been issued in London, equivalent of more than 70 per cent of the global offshore market.
"This government will continue to work closely with both India and our financial services sector to ensure our growing rupee bond market continues to help finance India's ambitious infrastructure investment plans," May said in a statement.
Masala bonds, unveiled in 2015, are an opportunity for Indian firms to raise money, while giving international investors access to higher yields in a zero-yield world.
They can be more expensive than issuing bonds in the local market because of India's 5 per cent withholding tax on such international deals.
As well as a way to borrow overseas, they are also an attempt to make the tightly-controlled rupee more widely available in global markets, similar to the way in which China has moved to sell more yuan debt to overseas investors.