February 11, 2014--At a time when India’s growth has slowed, IFC is taking an integrated approach to support the country’s capital markets – an exciting combination of off- and onshore programs, and advisory services intended to support the country’s growth agenda.
IFC is often the first international or corporate issuer of local-currency bonds in a market. We work closely with regulators and market participants to refine the regulatory framework, encourage greater participation in local markets. and provide a model for other international issuers.
A Strong Partnership
In India, IFC’s partnership with policymakers and regulators to support a well-developed bond market is critical to meet India's vast needs for long-term finance. At the G20 Summit in October 2013, Indian Finance Minister P. Chidambaram called for greater IFC involvement to encourage private sector flows into infrastructure.
To this end, IFC announced its $1 billion global Indian rupee bond program late last year. In a series of swift tranches since then, the amount of bonds issued under the program is nearing $500 million, reflecting a continuing, overwhelming reception from global investors.
“IFC's offshore bond program signals confidence in India,” said IFC VP and Treasurer Jingdong Hua. “The program will bring liquidity and depth to the off-shore rupee market, crowd in foreign investors to invest in rupee bonds, and pave the way for alternative funding for Indian companies. IFC will also be better placed to support India’s private sector.”
IFC will issue the remaining balance under the $1 billion program this calendar year.
A dialogue is on with Indian regulators for a large-scale onshore issuance program as well, said IFC VP for Asia & Pacific, Karin Finkelston said in an interview with CNBC.
IFC is also working toward issue a local currency bond in Nepal.
In addition to setting up offshore and onshore bond programs, IFC is sharing global expertise with market participants. IFC, along with World Bank, convened a workshop in Mumbai recently where policymakers, regulators, practitioners, investment bankers and rating agencies discussed challenges and opportunities for deepening capital markets in India.
At the meeting, U. K. Sinha, Chairman of the Securities and Exchange Board of India, highlighted the need to build trust and facilitate ease of doing business and trading, noting that financing needs will be better addressed if Indian companies can issue bonds in rupees and currencies other than dollars in offshore markets. Currently, Indian companies can only issue in dollars.