Masala bonds are bonds issued outside India and denominated in Indian rupee. «Masala» stands for «a mixture of spices» (hindi). The definition is similar to Chinese Dim Sum
. Masala bonds appear attractive for an investor since they allow investing in rupee denominated assets through reliable international depositary systems Euroclear and Clearstream, while having no access to the domestic Indian market. As for an issuer, masala bonds’ attractiveness is defined by a lower coupon rate in comparison with domestic Indian bonds. Besides, issuers of masala bonds are becoming able to increase their liquidity sufficiently, as well as use flexible Ind-AS financial statements system of India in place of rigid IFRS one.
In 2007, masala bonds were listed at London SE for the first time with Barclays Bank as the issuer. In 2013, IFC’s masala bonds (IFC, 7.75% 3dec2016, INR
) were listed at Singapore SE. In 2017, the late September, IREDA issued 5-year «green»
masala-bonds at London SE (Indian Renewable Energy Development Agency, 7.125% 10oct2022, INR
). From 2007 to 2016 masala bonds issuers raised more than 320 billion rupee (~$6.4 bn) at London SE and more than 170 billion rupee (~$3.4 bn) at Singapore SE in total. As of April 2017, there are 35 emissions of masala bonds listed at London SE.