HDFC becomes first Indian Company to issue masala bonds

The Housing Development Finance Corporation (HDFC) has become the first Indian company to issue rupee-denominated bonds “masala bonds” on London Stock Exchange (LSE).

 The bond will help HDFC, India‟s biggest mortgage lender (home finance company) to diversify its borrowing profile and access global investors.

 With this issuance of masala bonds, HDFC is planning to raise 750 million dollars from the overseas market during the current financial year.

What are masala bonds?

 The Masala bond refers to a rupee-denominated bond through which Indian entities can raise money from foreign markets in rupee, and not in foreign currency.

 Basically, bonds are instruments of debt that are typically used by corporates to raise money from investors.

 By issuing bonds in rupees, an Indian entity is protected against the risk of currency

 fluctuation, typically associated with borrowing in foreign currency.

 Masala bonds also help in internationalization of the rupee and in expansion of the Indian bond markets. These bonds are usually traded on the LSE and not in India.