First tranche of IFC rupee linked $1 bn bonds before 2013

The International Finance Corporation (IFC) expects to come out with its rupee linked bonds issue before the end of 2013 as a part of its plan to raise $1 billion, said a senior official.

"We expect to launch the bond in the markets in the next few months. Bonds will be issued in a series of tranches and we hope to issue the first tranche before the end of the calendar year," Monish Mahurkar, IFC director, Treasury Client Solutions told IANS.

On Thursday IFC, the investment arm of the World Bank announced its plans to raise $1 billion through offshore bond issue. According to IFC, it is the largest of its kind.

Under the programme, IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.

"We initially expect to issue 2-3 years tenor bonds given our current understanding of market appetite. Over time we can possibly issue longer tenors going out perhaps to 10 years. We do not yet know the yield," Mahurkar added.

According to him, IFC would target wide range of investors looking to add rupee exposure to their portfolios.

"This could include asset managers, bond funds, pensions, insurance, hedge funds, sovereign funds and even central banks," he said.

According to him, IFC would invest the proceeds in debt instruments to support private sector development in India in sectors like infrastructure, increasing access to financial services for small and medium businesses, health and others.

Mahurkar said the average lending rate is not yet known.

According to IFC, India accounted for $4.5 billion of its committed investment portfolio as of June 30, 2013 - more than any other country.

In FY13, IFC invested $1.38 billion in India to achieve several strategic priorities such as promoting inclusive growth in India's low-income states, addressing climate change, and supporting global economic integration.

Over the years, IFC has issued bonds in 13 local currencies, including the Brazilian real, the Chinese renminbi, the Nigeria naira, and the Russia ruble.

Often, IFC is the first international or corporate issuer of local-currency bonds in a market.

When issuing local-currency bonds, IFC works closely with regulators and market participants to refine the regulatory framework, encouraging greater participation in the local markets and providing a model for other international issuers, said IFC.

IFC has provided over $10 billion in local-currency financing across 58 currencies using a variety of financing tools-more than any other international finance institution.