The New Development Bank, which is run by the countries that belong to BRICS, has made available $500 million rupee denoted masala bonds. This bond can only be issued outside of India. This bank is headquartered in Singapore and has $100 billion in assets.
As it comes no surprise to me that the headquarters is located in Singapore, never the less that is still a lot of money! I was not to familiar about rupee denoted masala bonds until I did a little research on it myself. As you had mentioned as well this is a bond that is issued by an Indian entity in a foreign market. An example that I have found as well is if a $1000 bond is issued overseas, its 10% interest rate should be made in dollars ($100). As it is now the responsibility of the issuer to give the $100 instead of the rupee-denominated bonds.
ReplyDeleteAs I was able to find this information below:
http://www.indianeconomy.net/splclassroom/261/what-are-rupee-denominated-bonds-or-masala-bonds/
Great post!
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ReplyDeleteI am trying to understand why Masala bonds. Masala bonds are the newest type of bonds which are rupee-linked bonds such that they are issued to offshore investors but the settlement happens in dollar terms. The major benefit of this bond is that the currency risk is not borne by the issuer. These bonds have a bonds must have a minimum maturity of five years and are issued in Indian currency and paid in the terms of dollar value.
ReplyDeletehttps://www.quora.com/What-is-the-Difference-between-rupee-bond-and-Masala-bond
We (including the text) did not get into international bonds...an interesting trade and exchange arena..from Dragon bonds, to Yankee bonds...they can be used in lieu of payments to hedge currency fluctuations also!
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