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IFC Debuts Maharaja Bonds, Attracting Foreign Investment and Setting Triple-A Benchmark for India's Domestic Capital Markets

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Mumbai (Sept 23, 2014): IFC, a member of the World Bank Group, today issued its first onshore rupee bond, setting an international triple-A benchmark for the country's domestic capital markets. The IFC Maharaja bonds raised Indian rupees 6 billion, or approximately $100 million, from international and domestic institutional investors. The bonds will be listed on India’s National Stock Exchange (NSE).

The bonds offer an innovative structure to attract different types of investors to India's capital markets. There are four different tranches with different maturities under the same issuance: a five-year bullet bond of $25 million, a 10-year bullet bond of $25 million, and two separately tradeable redeemable principal parts (STRPPs) with maturities ranging from 13 to 20 years. IFC can increase the size of issuance according to its funding needs under the STRPP structure. All proceeds of bonds issued under this structure will be used for infrastructure investments in India.

The listing of IFC Maharaja bonds shows NSE’s continued commitment to working with global partners to bring high-quality issuers and increase the depth and vibrancy of India’s domestic capital markets.

HSBC, ICICI Securities Primary Dealership, and SBI Capital Markets were the lead arrangers for the issuance.

“Deep, efficient capital markets are the foundations of long-term growth because they create access to finance for the private sector,” said IFC Vice President and TreasurerJingdong Hua. “The innovative structure of IFC’s Maharaja bonds enables us to efficiently connect savings from international and domestic investors to investments in infrastructure, while setting a triple-A pricing benchmark in the domestic capital markets that will pave the way forother high-credit issuers.”

"We appreciate the support of the government of India and the regulatory agencies for IFC's efforts to develop and deepen the offshore and onshore rupee markets," he added.

“The IFC Maharaja Rupee bond is an important issuance for the Indian fixed income markets. This was possible due to the combined efforts and commitment of the Finance Ministry and the regulators, Securities and Exchange Board of India and Reserve Bank of India.We believe issuances such as this will go a long way to create vibrant debt markets in the country,” said NSE Managing Director& CEO ChitraRamkrishna.

IFC issued a five year bullet bond with a fixed rate coupon of 8.0 percent and a ten year bullet bond with coupon of 7.97 percent, both payable semi-annually. Both the bonds priced approximately 50 basis points below the Indian Government Bond ("IGB") yields of comparable maturities.

The STRPPs include callable bonds and has been priced in a range of 20 to 30 basis points above the relevant maturity IGB benchmark yields, with coupons of 8.88 percent (for maturities of 13 to 18 years) and 9.00 percent (for maturities of 19 to 20 years).

The five and ten year maturities have been subscribed to by Foreign Institutional Investors at yields  below the relevant IGB benchmarks reflecting the value of IFC's international triple-A rating. This is the first time a bond issuance in the Indian domestic markets has been priced below the IGB benchmark yield curve.

The IFC Maharaja bonds are issued under a $2.5 billion program, to support India’s domestic capital markets. The issuance follows IFC's successful completion earlier this year of a global rupee bond program which raised $1 billion from investors globally.

In FY14, IFC invested $1.2 billion in India along its strategic priorities of providing counter-cyclical support to infrastructure, promoting financial inclusion, and enhancing access to quality and affordable healthcare to the under-served. IFC invested close to $380 million to support infrastructure development in the country during the last fiscal.