World Bank group member IFC has raised Rs. 1,000 crore (USD 160 million) in the U.S. from its first offshore sale of rupee bonds.
The offering, which was oversubscribed twice, is part of the global development institution’s USD 1-billion offshore rupee bond programme, according to a statement from the International Finance Corporation.
The three-year bond was offered and settled in USD.
The IFC will convert the proceeds into rupees in the domestic spot exchange market and use the money to finance private sector investments in the country.
The bonds carry a coupon of 7.75 per cent and will be listed on the Luxembourg and Singapore exchanges, it said.
The idea of such a bond was mooted when the rupee depreciated during the June-August period amid heightened worries the U.S. would start tapering its stimulus programme. It was said such an offering would provide relief to the domestic currency.
“The IFC global rupee bond will help attract other foreign investors to the offshore rupee market and provide an alternative source of rupee funding for investment in the country,” IFC vice-president and Treasurer Jingdong Hua said.
The offering was “strongly oversubscribed” with orders from investors including asset managers, insurance companies, central and private banks, corporations and pension funds in Asia, Europe and the U.S., reaching Rs. 20 billion, the IFC said.
In the final allotment, investors from the U.S. accounted for 74.8 per cent of the amount, Asia 19.1 per cent and Europe 6.1 per cent.
HSBC, JP Morgan, and Bank of America-Merrill Lynch acted as the lead managers for the bond, it added.
IFC has so far issued 13 local currency bonds, including the Brazilian real, Chinese yuan and Nigerian naira.
With commitments of USD 4.5 billion, India accounted for the highest committed investment portfolio by IFC globally as of June 30. Last fiscal, it announced commitments of USD 1.38 billion to promote inclusive growth in low-income states, address climate change and support global economic integration.