Indian infrastructure firms seek to diversify debt and eliminate currency risk with masala bonds

Mumbai/Singapore: Several Indian infrastructure firms and steel companies plan to diversify their funding options with the masala bonds or overseas bonds denominated in Indian rupees, after the government recently clarified on aspects of taxation of income from such bonds. Although Indian companies have raised overseas funds earlier in foreign currencies like dollars and other currencies, these masala bonds would help them eliminate the currency fluctuation risk. Among state-owned companies, NTPC is expected to start roadshows for bond issuance shortly. Analysts estimate masala bond issuance to reach US$ 16 billion in the year ending March 2016, which will nearly equal one-fifth of external commercial borrowings for the year.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.