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HDFC issues masala bonds

masala bondsRupee-denominated bonds have entered the offshore market. Housing Finance Development Corporation has raised Rest 3000 crore through this route, which are also named ‘masala’ bonds. The RBI had allowed issue of such bonds around 10 months ago. These bonds allow an issuer to raise funds in the overseas market without taking on the currency risk typically associated with foreign currency-denominated bonds or loans. The risk lies with the investor and the Indian company can access a wider set of investor base. HDFC raised the funds at a fixed semi-annual coupon of 7.875% per annum and has a tenor of three years and 1 month. Deepak Parekh, chairman of HDFC, said this is a milestone transaction for HDFC and it has successfully achieved its objective of attracting a global pool of capital to further diversify its borrowing profile. The positive investor response towards this issuance reinforces the blue-chip positioning of HDFC, and establishes a significant benchmark for Indian companies, he added. The annualized yield to investors works out to 8.33% per annum, which is five basis points lower than the last domestic issue by HDFC on 12 July 2016, said the company.

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