First Indian masala bond unpicked

Author: Amélie Labbé | Published: 26 Jul 2016

Housing Development Finance Corporation Limited (HDFC) has become the first Indian corporate to issue offshore rupee-denominated bonds - commonly referred to as masala bonds - in a landmark deal that could spur similar transactions from other potential issuers.

The Indian mortgage lender raised INR30 billion ($446 million) from an offering on the London Stock Exchange that was three times oversubscribed. The issuance comprised an initial INR20 billion and a further INR10 billion greenshoe option in case of oversubscription. The final order book exceeded INR86 billion.

Institutional investors made up 82% of allocations and private banks the remainder, HDFC said in a statement.

The three-year and one month bonds have an annual yield of 8.33%, a discount compared to their traditional domestic offerings, which stand at 8.38%. It is also lower than the 8.45% the company targeted in its initial guidance. HDFC’s senior, unsecured notes will pay a semi-annual coupon of 7.8%....