State-run firms to launch $1-bn masala bonds in UK

STATE-OWNED blue chip companies in the power sector are likely to launch masala bonds totalling $1 billion in the next three or four months in the UK to gauge the investor appetite, power minister Piyush Goyal said in London on Wednesday.

The proceeds from the rupee denominated debt instruments would be used for achieving renewable capacity target of 175 gigawatt as announced by the government.

Companies including NTPC, Neyveli Lignite Corporation, Power Finance Corporation, Power Trading Corporation and Rural Electrification Corporation, are likely to launch these bonds.

The tenor of these bonds is likely to be limited to a band of five-seven years and these are going to be in smaller denominations ranging from $150-250 million.

These will be subject to decisions made by the boards of the PSU energy companies, Goyal said. He added that Energy Efficiency Services Limited, company that is tasked with distribution inexpensive LED bulbs, could also explore issuance of green masala bond subject to credit rating.

Goyal also announced that the IREDA is coordinating a billion-dollar equity fund in the renewable space. This will be professionally managed by an independent international fund management company for which public sector companies have already committed $315 million, the government said.

In 2015, the IFC issued the first masala bond listed on the London Stock Exchange. The bonds worth over Rs 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.

As India gears up to meet its ambitious renewable energy targets of 175 GW of installed capacity by 2022, the country is exploring international mechanisms of funding and is evaluating new and innovative tools to finance the renewables sector.

As a step in this direction, Indian public sector giants are likely to examine rupee-denominated debt instruments like masala bonds to create and develop a new market and identify benchmark prices for these new instruments, the power ministry said in a release. FE