Rs1500 cr first tranche of Masala Bond in Feb

KIIFB ties up Rs2500 cr term loans with 4 PSU banks

THIRUVANANTHAPURAM: The Kerala Infrastructure Investment Fund Board (KIIFB) is going ahead with its much-talked-about ‘masala bond’ plan with the issue expected to hit the market by the first week of February, 2019.

Maslala bonds are bonds issued outside India, but denominated in Indian rupee.

Talking to, Sanjeev Kaushik (IAS) (seen in the picture), the deputy managing director of KIIFB, said the 10-day long back-to-back roadshows to be run in Singapore, Hong Kong, London and Dubai, will kick-start from the last week of January, 2019.

He said KIIFB is getting a lot of investment enquiries from quite a number of funds from London and Hong Kong. “Even yesterday, we got a serious enquiry from a large Canadian institution, which is just waiting for the roadshows to be concluded,” said a confident Kaushik.

While the total size of the programme to be listed on London and Singapore stock markets is Rs5,500 crore, KIIFB has already received RBI approval to raise up to Rs2600 crore.

“However, we have capped the size for the first tranche of the five-year paper at Rs1500 crore as we don’t need the whole funds right now. There is a cost for the funds, so we will raise the remaining portion when the need arises,” he added.

Referring to the Rs1500 crore debenture programme KIIFB notified had some time back, Kaushik said though there were institutions willing to invest, the interest they had sought was a bit high and hence KIIFB decided to put the issue on hold for the time being.

In order to fund the projects worth tens of thousands of crores primarily in the state’s infrastructure, the Board needs huge funds over and above what the state government has allocated. Apart from the funds to be raised through the masala bonds, KIIFB has already tied up Rs2500 crore with three or four public sector banks as term loans.

Following the BB rating from the international rating agencies, Fitch and S&P in September, there were hushed up exchanges among the market observers and experts that KIIFB would find it difficult to approach international investors with a below- investment-grade rating. also had quoted experts in the market as saying that KIIFB might find it extremely difficult to raise funds from overseas market with the given rating that is below investment grade.

Sanjeev Kaushik argued that KIIFB never believed getting a better rating than this as the Central Government itself has been accorded BBB- rating, which is the lowest investment grade rating from Fitch or S&P.

Kerala is the first and the only state or state enterprise to have solicited a credit rating from an international rating agency. Kaushik said KIIFB could have come to the market in October or November with the masala bond, but the floods that jolted Kerala dampened the sentiments and hence KIIFB decided to wait and watch until the scenario improved.

“We have also been waiting for the rupee to stabilise and the bond yields to drop from the ‘too-high’ levels. The things stand far better now and we are confident the bond will receive good response from the international investors,” he added.


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