London Stock Exchange welcomes British Columbia
In September this year, London Stock Exchange welcomed another global first, as the Canadian Province of British Columbia becomes the first foreign government entity to issue a Masala bond, choosing London, the global home for Masala bonds, for its listing. Today we welcomed Michael de Jong, QC MLA, British Columbia Minister of Finance and House Leader along with Alok Sharma, MP, Minister for Asia and the Pacific for the Foreign and Commonwealth Office and His Excellency Mr. Dinesh Patnaik, Acting Indian High Commissioner to the UK to celebrate this occasion.
The British Columbia bond raised INR 5 billion (c. $75 million) with 6.62 per cent semi-annual yield, securing high quality investor support from across Europe, Asia and America. It is AAA rated by the three major rating agencies and will mature on 9 January 2020.
In a pioneering simultaneous listing on London Stock Exchange, the proceeds of the British Columbia bond will be invested in HDFC’s, one of India’s leading banking and financial services companies, second Masala bond listing on London Stock Exchange. The bond raises a further INR 5 billion, paying a coupon of 7 per cent and follows HDFC’s landmark issuance in July this year of the world’s first Masala bond by an Indian corporate.
The Reserve Bank of India Governor, Raghuram Rajan, said on 27 August 2016:
“The first issues recently of Masala Bonds reflect a coming of age of Indian debt that has been insufficiently remarked upon – for the first time in recent decades, the Rupee’s value is trusted enough in international markets that corporations can issue there in domestic currency. Going forward, we hope a more vibrant Masala bond market abroad will complement a vibrant domestic corporate bond market.”
Today’s landmark listings follow several high profile Masala bond issuances by supranational institutions, municipals and private companies on London Stock Exchange this year, cementing London Stock Exchange’s clear position as the leading global venue for offshore Rupee denominated fundraising.
- Septembers issuances bring the total number of Masala bonds that have listed on London Stock Exchange to 33, raising equivalent to approximately $3.86 billion for Indian infrastructure.
- In July, Housing Development Finance Corporation, one of India’s leading banking and financial services companies listed the world’s first Masala bond issued by an Indian corporate.
- Last year, IFC, a member of World Bank Group, listed the first ever Green Masala bond on London Stock Exchange and they have listed Masala bonds out to ten year maturity.
Nikhil Rathi, CEO, London Stock Exchange plc & Director of International Development, London Stock Exchange Group:“Today’s pioneering simultaneous transactions on London Stock Exchange confirm RBI Governor Rajan’s recent statement that Masala bond issuances reflect “a coming of age of Indian debt.”
“London Stock Exchange would like to congratulate the leadership shown by the Government of British Columbia in being the world’s first foreign government entity to issue a Masala bond. British Columbia has always led the way in building new markets and we are proud they have chosen to access the widest range of global investors through London, the global centre for Masala bonds. Together we are building an exciting and deep additional channel of finance for Indian infrastructure.”
“We also welcome the ground breaking simultaneous listing on London Stock Exchange by HDFC, one of India’s leading banking and financial services companies, on their second Masala bond. This demonstrates the unique reach of London Stock Exchange, forging a partnership between a AAA foreign government entity, a world-class Indian issuer and the widest pool of global investors across all time zones, together playing their part in India’s growth story.”
British Columbia Minister of Finance Michael de Jong, QC:
“The Province of British Columbia is honoured to have issued an Indian Rupee denominated bond on the London Stock Exchange, making British Columbia the first foreign government to issue a Masala bond. The London Stock Exchange is a world-leader in supporting Masala bond issuances having already hosted the world’s first Indian corporate Masala Bond from the Housing Development Finance Corporation (HDFC) and the world’s first green Masala bond. The international reputation and platform provided by the LSE sets the stage for more Masala bond issuances from around the world and will be most welcome for sustaining the Masala bond market’s success.
“The Masala bond issuance offers British Columbia a means to become well-positioned to profile our confidence in the outlook for India, and to participate in the internationalization of the Rupee and India’s economy. We are pleased to know proceeds from the bond will be put to work in India’s housing industry by HDFC, a well-established corporate leader who finance’s an industry in which we aspire to grow our B.C. wood exports.”
Housing Development Finance Corporation Limited (HDFC) Chairman Deepak Parekh:
“I am delighted to announce that HDFC Ltd has issued INR 5 billion of Rupee denominated Masala Bonds to the Province of British Columbia, today. We feel privileged to have the Province, a sovereign, as an investor into HDFC Ltd.
“We are happy to know that the Province of British Columbia has also successfully placed INR 5 billion of Rupee Denominated Masala Bonds and utilized the proceeds to invest into HDFC’s Masala Bond Issue. This transaction is a landmark deal as it opens up a new market for sovereign issuers and investors."
Economic Secretary to the Treasury, Simon Kirby:
“It is testament to the UK as the world’s leading financial centre that a Canadian province has chosen London as the place to issue their first Indian rupee-denominated ‘masala’ bond. It is further proof that Britain is open for business. I am proud that our financial services sector is fuelling growth and strengthening our economic ties with both India and Canada.”
British Columbia’s bond listing is the latest in a long line of global first issuances on London Stock Exchange.