According to reports, the Indian Renewable Energy Development Agency (IREDA) has received the Reserve Bank of India (RBI)’s approval for its masala bond issuance, two sources confirmed to FE. “The validity of the approval stands for six months,” they said. The IREDA is looking to raise $300 million via green masala bond issuance. Another person pointed out that the central bank has indicated that approvals from any other authority will have to be separately taken. The IREDA intends to use the funds for fresh financing as well as refinancing of renewable energy projects. The company had hired six merchant bankers — YES Bank, ICICI Bank, Standard Chartered, HSBC, Barclays and Axis Bank — for the issue. “It is still unclear about how would this be taken forward? We would have to talk to the bankers on the matter and approach the Sebi for further guidance,” one source said.
Last week, Sebi had stopped further issuance of masala bonds till foreign portfolio investors’ (FPI) investment in Indian corporate debt fell below 92%. The latest depository data show that FPIs have already utilised 99.85% of the allotted quota of Rs 2.44 lakh crore. FE had earlier reported that investment bankers have requested the RBI and the finance ministry to consider some relaxation in the investment limits in corporate bonds. As of now FPIs are permitted to invest “$51 billion” or “Rs 2.44 lakh crore” into corporate bonds — both figures are mentioned on the depositories side by side. The exchange rate for this limit was set when the rupee was hovering around 50 to the greenback.
Some investment bankers wanted the current exchange rate to be used so as to create more room for FPI investments. The argument being put forward is that the value of the rupee has depreciated since the original limits were fixed in dollar terms. However, some treasurers observed the RBI is highly unlikely to make this concession considering that it would increase the limit by over Rs 80,000 crore at a time when inflows into Indian debt are at their highest and the rupee has strengthened appreciably. FPIs have so far infused close to$17.30 billion into Indian debt. Equities also have seen considerable fund infusion.