PSUs may Float $1 b Masala Bonds in UK
Energy sector companies may go to market with smaller issues in the range of $150-200 million
New Delhi: Public sector companies including NTPC, Power Finance Corp and Rural Electrification Corp are likely to float rupee-denominated debt instruments, or masala bonds, in the UK to raise $1 billion in next three-to-four months to fund the country's ambitious renewable energy plans. “Companies including NTPC, Neyveli Lignite Corp, Power Finance Corp, Power Trading Corp and Rural Electrification Corp are likely to launch these ma- sala bonds totalling $1 billion (about .₹ 6,600 crore) in the next three or four months in the UK to gauge the investor appetite,” power minister Piyush Goyal said on Wednesday.
The tenor of these bonds is likely to be limited to a band of five to seven years and these are going to be in smaller denominations ranging from $150-250 million, or about .₹ 990-1,650 crore. These will be subject to decisions made by the boards of the PSU energy companies, he said.
In addition, Energy Efficiency Services Ltd could explore issuance of green Masala Bond subject to credit rating, Goyal said at a round table on ‘Financing Renewables and Energy Efficiency’ in London. The Indian Renewable Energy Development Agency Ltd (IREDA) is also coordinating a $1-billion equity fund in the renewable space.
This will be professionally managed by an independent international fund management company. Indian public sector companies have already committed $315 million, the minister said.
India targets renewable energy generation of 175 GW by 2022 and is exploring international mechanisms of to finance the renewables sector. In 2015, IFC issued the first masala bond listed on the London Stock Exchange. The bonds worth over .₹ 1,000 crore were issued in a range of tenors, including a ten-year, .₹ 10 billion rupee-denominated bond to raise funds for infrastructure projects.
Masala bonds are primarily rupee denominated bonds issued to overseas buyers.