{"id":4922,"date":"2021-10-04T15:03:43","date_gmt":"2021-10-04T09:33:43","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=4922"},"modified":"2021-10-04T15:32:06","modified_gmt":"2021-10-04T10:02:06","slug":"hdfc-bank-issues-masala-bonds","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/hdfc-bank-issues-masala-bonds\/","title":{"rendered":"HDFC Bank Issues Masala Bonds; Raises Rs. 739 Cr"},"content":{"rendered":"\n<p><a href=\"https:\/\/www.tickertape.in\/stocks\/hdfc-bank-HDBK?utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">HDFC Bank<\/a> raised Rs. 739 cr by issuing and allotting \u2018masala bonds\u2019 overseas on 30 September 2021. The bank will use the proceeds for banking activities. The masala bonds carry a coupon rate of 7.55%.<\/p>\n\n\n\n<p>These will be listed on the India International Exchange (IFSC) Ltd. and <a href=\"https:\/\/www.tickertape.in\/blog\/national-stock-exchange\/\">NSE<\/a> IFSC. The subordinated additional tier I bonds (<a href=\"https:\/\/www.tickertape.in\/blog\/at1-bonds-explained\/?utm_source=blog&amp;utm_medium=article\">AT1 bonds<\/a>) are compliant with Basel III norms.<\/p>\n\n\n\n<p>AT1 bonds are perpetual bonds. As the name suggests, perpetual bonds don\u2019t have a maturity date. These bonds are unrated and unsecured.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/hdfc-bank-issues-masala-bonds\/#What-are-masala-bonds\" title=\"What are masala bonds?\">What are masala bonds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/hdfc-bank-issues-masala-bonds\/#How-can-the-issuing-company-use-the-proceeds-of-these-bonds\" title=\"How can the issuing company use the proceeds of these bonds?\">How can the issuing company use the proceeds of these bonds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/hdfc-bank-issues-masala-bonds\/#Where-can-these-proceeds-not-be-used\" title=\"Where can these proceeds not be used?\">Where can these proceeds not be used?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/hdfc-bank-issues-masala-bonds\/#Benefits-of-masala-bonds-to-the-issuing-company-and-country\" title=\"Benefits of masala bonds to the issuing company and country\">Benefits of masala bonds to the issuing company and country<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What-are-masala-bonds\"><\/span><strong>What are masala bonds?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Popularly known as masala bonds, the rupee-denominated bonds are quite \u201cmasaledar\u201d.<\/p>\n\n\n\n<p>These are instruments issued outside India but in the Indian rupee and not the local currency. So, if the rupee rate falls, the investors or subscribers incur a loss.<\/p>\n\n\n\n<p>Masala bonds were first introduced by International Finance Corporation (IFC) in 2014 in India. IFC had issued them in India to fund infrastructure projects. Similarly, Indian companies issue these in overseas markets.<\/p>\n\n\n<span class='bctt-click-to-tweet'><span class='bctt-ctt-text'><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.tickertape.in%2Fblog%2Fhdfc-bank-issues-masala-bonds%2F&#038;text=Masala%20bonds%20are%20rupee-denominated%20bonds%20that%20are%20issued%20outside%20India%20but%20in%20the%20Indian%20rupee%3B%20not%20the%20local%20currency.&#038;via=TickertapeIN&#038;related=TickertapeIN' target='_blank'rel=\"noopener noreferrer\">Masala bonds are rupee-denominated bonds that are issued outside India but in the Indian rupee; not the local currency. <\/a><\/span><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.tickertape.in%2Fblog%2Fhdfc-bank-issues-masala-bonds%2F&#038;text=Masala%20bonds%20are%20rupee-denominated%20bonds%20that%20are%20issued%20outside%20India%20but%20in%20the%20Indian%20rupee%3B%20not%20the%20local%20currency.&#038;via=TickertapeIN&#038;related=TickertapeIN' target='_blank' class='bctt-ctt-btn'rel=\"noopener noreferrer\">Click To Tweet<\/a><\/span>\n\n\n<p>The RBI had permitted Indian companies to issue masala bonds in November 2016. As per the apex bank, the maturity period for <a href=\"https:\/\/blog.tickertape.in\/5-financial-instruments-to-invest\/?utm_source=blog&amp;utm_medium=article&amp;utm_campaign=\" rel=\"nofollow noopener\" target=\"_blank\">bonds<\/a> raised to the rupee equivalent of $50 mn in a fiscal is 3 yrs and for those raised above the rupee equivalent of $50 mn, the maturity period is 5 yrs.<\/p>\n\n\n\n<p>These bonds are converted at the market rate on the date of settlement of transactions taken on to issue the bonds and service interest thereon.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How-can-the-issuing-company-use-the-proceeds-of-these-bonds\"><\/span><strong>How can the issuing company use the proceeds of these bonds?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>To refinance rupee loan and non-convertible debentures (NCD)<\/li><li>To develop integrated townships and affordable housing<\/li><li>To meet working capital requirements<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Where-can-these-proceeds-not-be-used\"><\/span><strong>Where can these proceeds not be used?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>For real estate activities other than the development of integrated townships and affordable housing<\/li><li>To <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-prioritise-investing\/\">invest<\/a> in capital markets and use the proceeds for <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a> investment domestically<\/li><li>Activities prohibited as per<a href=\"https:\/\/blog.tickertape.in\/impact-of-fdi-on-the-environment-and-vice-versa\/?utm_source=blog&amp;utm_medium=article\" rel=\"nofollow noopener\" target=\"_blank\"> Foreign Direct Investment (FDI)<\/a> guidelines<\/li><li>To lend to other entities for the above purposes<\/li><li>To purchase land<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits-of-masala-bonds-to-the-issuing-company-and-country\"><\/span><strong>Benefits of masala bonds to the issuing company and country<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Capital gains arising from these bonds are exempted from tax<\/li><\/ul>\n\n\n\n<ul><li>These have no currency risk and thus protect the borrower from fluctuations in the currency<\/li><\/ul>\n\n\n\n<ul><li>Depreciation of the rupee doesn\u2019t impact the issuing company as the bonds are issued in Indian currency<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Masala bonds are also known as rupee-denominated bonds. These are issued in overseas markets but in home currency.<\/p>\n","protected":false},"author":27,"featured_media":4925,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[10,1744],"tags":[824,823,822],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/10\/8.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4922"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=4922"}],"version-history":[{"count":5,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4922\/revisions"}],"predecessor-version":[{"id":4933,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4922\/revisions\/4933"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/4925"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=4922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=4922"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=4922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}