Government to sell rupee bonds in Singapore

Prime Minister Narendra Modi announced that Singapore is one of the selected destinations for the issue of rupee bonds. Earlier in his UK visit, Modi has announced the issue of Masala bonds in the London Stock Exchange.

Singapore is a major investment ally for India as the tiny nation that has a population of only 5 million compared to India’s 1260 million is the second largest foreign investment source for India.

The rupee bonds or offshore rupee denominated bonds has become an ace instrument for infrastructure fund mobilization from foreign countries. Rupee denominated bonds issued by the IFC in the acronym of ‘Masala’ bonds’  has got large scale response from foreign markets.

Later the RBI has brought out a regulatory framework largely structured on its existing ECB policy, allowing Indian companies to issue offshore rupee bonds.  

Offshore rupee bond became a ‘bud under development’ for fund mobilization to support India’s infrastructure programme in recent years. The country need huge amount of money to implement large number of projects extending from bullet trains to industrial corridors.

The RBI policy on offshore rupee bonds is also lavish on private players and mainstream infrastructural companies to issue bonds.

The rupee bond was at the cynosure at London, where Mr Modi announced that Masala bonds will be issued in London Stock Exchange to mobilize funds for Indian Railways.  

 The IFC’s Masala bonds, gives a 6.3 percent return, compared with 2.3 percent on U.S. Treasuries.

The RBI policy allows an Indian firm to give up to government of India’s treasury yield plus 5% on the rupee bonds. This is a big attraction compared to China’s Dim sum bond which is a cousin of the Masala bond that has much lower returns.