British Columbia issues world’s first Masala bond by a foreign government entity on London Stock Exchange

  • Pioneering simultaneous listing with HDFC, issuing its second Masala bond on London Stock Exchange 
  • Listings confirm London’s leadership as global centre for Masala bond issuance
  • An exciting new finance channel for Indian infrastructure
  • British Columbia listing raises INR 5 billion (c.$75 million), with 6.62 per cent semi-annual yield, attracting global investor support

London Stock Exchange today is proud to welcome another global first, as the Canadian Province of British Columbia becomes the first foreign government entity to issue a Masala bond, choosing London, the global home for Masala bonds, for its listing. The British Columbia bond raised INR 5 billion (c. $75 million) with 6.62 per cent semi-annual yield, securing high quality investor support from across Europe, Asia and America. It is AAA rated by the three major rating agencies and will mature on 9 January 2020.

In a pioneering simultaneous listing on London Stock Exchange, the proceeds of the British Columbia bond will be invested in HDFC’s, one of India’s leading banking and financial services companies, second Masala bond listing on London Stock Exchange. The bond raises a further INR 5 billion, paying a semi-annual yield of 7.5 per cent and follows HDFC’s landmark issuance in July this year of the world’s first Masala bond by an Indian corporate. 

The Reserve Bank of India Governor, Raghuram Rajan, said on 27 August 2016:

“The first issues recently of Masala Bonds reflect a coming of age of Indian debt that has been insufficiently remarked upon – for the first time in recent decades, the Rupee’s value is trusted enough in international markets that corporations can issue there in domestic currency. Going forward, we hope a more vibrant Masala bond market abroad will complement a vibrant domestic corporate bond market.”

Today’s landmark listings follow several high profile Masala bond issuances by supranational institutions, municipals and private companies on London Stock Exchange this year, cementing London Stock Exchange’s clear position as the leading global venue for offshore Rupee denominated fundraising.

  • Today’s issuances bring the total number of Masala bonds that have listed on London Stock Exchange to 33, raising equivalent to approximately $3.86 billion for Indian infrastructure
  • In July, Housing Development Finance Corporation, one of India’s leading banking and financial services companies listed the world’s first Masala bond issued by an Indian corporate.
  • Last year, IFC, a member of World Bank Group, listed the first ever Green Masala bond on London Stock Exchange and they have listed Masala bonds out to ten year maturity

Details of London Stock Exchange’s extensive Masala bond credentials can be found at our global Masala bonds portal http://masala.bonds.com  

Nikhil Rathi, CEO, London Stock Exchange plc & Director of International Development, London Stock Exchange Group:
“Today’s pioneering simultaneous transactions on London Stock Exchange confirm RBI Governor Rajan’s recent statement that Masala bond issuances reflect “a coming of age of Indian debt.”

“London Stock Exchange would like to congratulate the leadership shown by the Government of British Columbia in being the world’s first foreign government entity to issue a Masala bond. British Columbia has always led the way in building new markets and we are proud they have chosen to access the widest range of global investors through London, the global centre for Masala bonds. Together we are building an exciting and deep additional channel of finance for Indian infrastructure. 

“We also welcome the ground breaking simultaneous listing on London Stock Exchange by HDFC, one of India’s leading banking and financial services companies, on their second Masala bond. This demonstrates the unique reach of London Stock Exchange, forging a partnership between a AAA foreign government entity, a world-class Indian issuer and the widest pool of global investors across all time zones, together playing their part in India’s growth story.”

British Columbia Minister of Finance Michael de Jong, QC:
“The Province of British Columbia is honoured to have issued an Indian Rupee denominated bond on the London Stock Exchange, making British Columbia the first foreign government to issue a Masala bond. The London Stock Exchange is a world-leader in supporting Masala bond issuances having already hosted the world’s first Indian corporate Masala Bond from the Housing Development Finance Corporation (HDFC) and the world’s first green Masala bond. The international reputation and platform provided by the LSE sets the stage for more Masala bond issuances from around the world and will be most welcome for sustaining the Masala bond market’s success.

“The Masala bond issuance offers British Columbia a means to become well-positioned to profile our confidence in the outlook for India, and to participate in the internationalization of the Rupee and India’s economy. We are pleased to know proceeds from the bond will be put to work in India’s housing industry by HDFC, a well-established corporate leader who finance’s an industry in which we aspire to grow our B.C. wood exports.”

Housing Development Finance Corporation Limited (HDFC) Chairman Deepak Parekh:
“I am delighted to announce that HDFC Ltd has issued INR 5 billion of Rupee denominated Masala Bonds to the Province of British Columbia, today. We feel privileged to have the Province, a sovereign, as an investor into HDFC Ltd.

“We  are  happy  to  know  that  the  Province  of British Columbia has also successfully  placed  INR  5  billion of Rupee Denominated Masala Bonds and utilized  the  proceeds  to  invest  into  HDFC’s  Masala  Bond Issue. This transaction is a landmark deal as it opens up a new market for sovereign issuers and investors."

Economic Secretary to the Treasury, Simon Kirby:
“It is testament to the UK as the world’s leading financial centre that a Canadian province has chosen London as the place to issue their first Indian rupee-denominated ‘masala’ bond. It is further proof that Britain is open for business. I am proud that our financial services sector is fuelling growth and strengthening our economic ties with both India and Canada.”

British Columbia’s bond listing is the latest in a long line of global first issuances on London Stock Exchange.

  • August 2016 – NTPC, Indian energy conglomerate first Indian green Masala bond issuer
  • July 2016 – HDFC lists world’s first Masala bond by an Indian corporate
  • June 2016 – Axis Bank lists India’s first internationally listed certified green bond & its entire $5 billion MTN programme
  • June 2016 - first Chinese sovereign RMB bond issued outside of China lists in London, bringing total number of offshore RMB bonds issued in 2016 in London to 54, more than all other markets combined
  • August 2015 - International Finance Corporation (IFC) issues world’s first green Masala bond, raising £31 million equivalent
  • November 2014 – IFC lists first Masala bond, going on to issue a further three Masala bonds in London over the last two years

Today’s bond joins a number of Canadian issuers on London Stock Exchange.

  • London Stock Exchange is home to 294 bonds from Canada which have raised $172 billion
  • 15 Canadian companies are listed on London’s markets, with an aggregate market cap of approximately £2.1 billion
  • Since 2006, close to £1.7 billion has been raised by Canadian companies in London through listings and further issues
  • The largest Canadian company listed on London Stock Exchange is Entertainment One, which has raised £500 million in London through six further issues

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