Diaspora bond issue to have unit face value at Rs25,000

Issue aims to raise Rs2000 cr ($270 mn) from expatriates

THIRUVANANTHAPURAM: The Kerala government’s Diaspora Bond that targets to raise Rs2000 crore ($270million) will be denominated in Indian rupee at a face value of Rs25,000.

The issue of the innovative bond has been entrusted with Kerala Infrastructure Investment Fund Board (KIIFB), which has earned the reputation of issuing the country’s first ever sub-sovereign masala bond that raised Rs2150 crore last year.

$150 mn IFC facility for KIIFB

KIIFB is also set to sign a $150 million financing soon with International Finance Corporation (IFC), the private sector lending arm of the World Bank.

Nabard loan for K-fone

In another fund raising act, KIIFB said it has secured a Rs1061.73 crore loan under the Nabard Infrastructure Development Assistance (NIDA) for the K-fone project being done at an investment of Rs1516.76 crore.

The Diaspora bond issue will be marketed to Non-Resident Keralites (NRKs) across various international geographies.

The Diaspora bond is intended to finance the Rebuild Kerala Initiative (RKI) towards the rebuilding efforts as well as to prevent the occurrence of natural disasters like the 2018 floods in the future.

“In addition to mobilization of domestic resources, financing the RKI involves collaboration with the World Bank,” the KIIFB’s latest newsletter said.

According to KIIFB, the IFC loan is likely to be supported by other international financing institutions like the Asian Development Bank (ADB).

KIIFB considers it a great opportunity to broaden its international base, after its foray into the ‘masala bond’ market. “Like the Masala Bond, this will also be a first of its kind for any State institution to team up with IFC,” stated KIIFB in its newsletter.

Push to PPP models

IFC also has offered its technical support to shape projects for Public Private Partnerships (PPP). With the growing development needs of the State, KIIFB believes this facility will help usher in at least a few major projects both from within India and from abroad as well very soon.

The newsletter noted that the first set of proposals for land acquisition for the Kochi-Bangalore Industrial Corridor has been approved by the Board for an amount of Rs1030 crore.

Underlining the importance of Diaspora bond in the context of the contributions of Kerala expatriates in the GCC to the state’s economy, Government of Kerala said it intends to establish regular channels of interactions with those in the GCC countries, to harness their goodwill and engage them in the Rebuild Kerala Development Program.

“These diaspora bonds can be purchased by the NRKs not only to aid efforts to rebuild Kerala better, but also to earn an attractive rate of interest,” KIIFB further explained.

 

 

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