Accessing the Global Markets Through London London Stock Exchange Masala Bond Offering September 2016 Page 1
India – UK Finance Partnership “ We will work together with the British “It’s a real opportunity to open a new chapter in the “We will also increasingly raise funds in relationship between our two countries.” London’s financial market. I am pleased Government, industry, and the financial market to deepen our relationship and harness that David Cameron that we will issue a railways rupee bond interest in India’s infrastructure. Very soon, in London stock market. This is – for “Today , we have outlined a bold and ambitious vision for these bonds will become strong instruments for this is where the journey of Indian engagement between our financial markets.” our strategic partnership, and the decisions we have Railways had begun.” taken today reflect our firm commitment to pursue it and Narendra Modi Narendra Modi the confidence to achieve it. Indeed, the outcomes today “ रृपी ब ॉः ड अपने आप मेः भारत की आरॎथिक have shown that we have already taken our relationship to a new level.” सॉःपनॎनता का एक महतॎवपूरॎि ममश्ऱरॎ है और Narendra Modi हहॉःदुसॎतान क े हर नागररक को इसको गौरव क े रृप मेः देखना चाहहए और इसको उजागर करना चाहहए , तभी तो भारत की ताकऽत बढऽती है “ Narendra Modi Source: Joint press release UK-India Summit, 12 November 2015, https://www.gov.uk/ Page 2
LSEG at the heart of India-UK EFD 13 March 2015, international investors roundtable, LSE Roundtable with Railways Minister, 30 October 2015 London Stock Exchange has more Indian “London Stock Exchange is one of the premier hubs globally companies listed on our equity and debt for any financial activity ” markets than any other international market Arun Jaitley, Honourable Minister of Finance and provides cutting edge technology to some of India’s leading exchanges. India’s “ Strengthening the economic and financial links between India most dynamic companies have access to and the UK is a key priority for the government, and a stable the world’s largest pool of institutional and competitive financial services industry in the UK is an investment capital here in London.” important asset to the UK and to the rest of the world .” Xavier Rolet, CEO, LSEG Priti Patel, Exchequer Secretary to HM Treasury and the 18 Nov 2014, IFC Market Open Prime Minister’s Indian Diaspora Champion London Stock Exchange High profile repeat 33 4 6 14 issuance from INR bonds listed New Masala bonds New Masala bonds INR bonds currently historically listed in 2015 listed in 2016 YTD SSA’s listed Page 3
April 2016 Visit of Minister Piyush Goyal “Minister of Power and Coal Piyush Goyal, who is on a two-day visit to the UK, visited the London Stock Exchange. During the visit, Goyal met officials from Natgrid and UK Power Network and explained about his plans and vision to increase the power generation in India and renewable energy scale up plan has been drawn up to 2022. According to sources, Goyal emphasised the need for the developed world to show its commitment towards climate change by putting money in climate finance .” Business Standard, 21 April 2016 “In an attempt to raise resources for India’s ambitious green energy programme, state -run firms, such as NTPC Ltd, Neyveli Lignite Corp. Ltd, Power Finance Corp. Ltd (PFC), Rural Electrification Corp. Ltd (REC) and PTC India Ltd, plan to issue masala bonds to raise $1 billion, according to a government statement released on Wednesday .” VCCIRCLE, 20 April 2016 Page 4
London Stock Exchange’s Global Reach London Stock Exchange is now the largest Masala bond centre globally. Ever since the first Masala bond listing in London in 2007, we are firmly committed to developing long-term strategic partnerships with issuers to ensure the success of this financing stream and help Masala bonds evolve from specialist to a mainstream asset class. “ Addressing climate change is a priority for IFC in India . IFC’s green Masala bond demonstrates the powerful role of capital markets in mobilizing savings for climate finance — and a listing in London allows us to attract the widest possible range of international investors“ August 2015, IFC press release for INR 3.15bn Green Masala Bonds 13 August 2015, IFC & Yes Bank Market Open, LSE In July 2016, London Stock Exchange "London Stock Exchange “ IFC issued the bonds in welcomed the world’s first Masala continues to distinguish itself London to leverage the bond issued by an Indian corporate. city ’ s standing as a by offering a wide range of The landmark INR30bn 37 month bond premier financial centre . financial instruments and with a yield of 8.33% from Housing The vast majority of Development Finance Corp (HDFC), enjoys unshakable trust from investors are European was 4.3 times oversubscribed and international investors .” insurance companies.” , paves the way for the opening of the Chairman Deepak Parekh, Nov 2014, IFC press Masala bond market globally to HDFC press release for release for INR 10bn, support Indian company and INR30bn 37month 8.33% bond 10year 6.3% bond infrastructure financing Page 5
LSEG’s India Partnerships Bharti Airtel Zyfin & Sun Global Yes Bank SBI-LSEG IRFC MoU to foster joint Construction of “FTSE -SBI Listing the world’s first India collaborations on bond and Issuance of offshore Rupee India Bonds Indices” to be Issuance of maiden sterling Description fixed income ETF on London equity issuance in London, denominated bonds in bond in London used initially by a new Stock Exchange with a strong focus on Green London investment fund run by SBI Infrastructure Finance Up to $550m Green bonds £500m -- -- -- Size $1bn equity “The bond issue will help Bharti “LSE is the broadest ETF “ Both financial institutions will “ These indices, to be launched “We are set to launch a railway extend maturities and diversify market in Europe. This ETF will leverage their complementary in the first half of 2016, will bond in London. It is investor base on its debt give international investors strengths to facilitate access to facilitate investment into India's appropriate as the journey of portfolio” access to the Indian fixed capital raising in London and bond markets and support Indian Railways started in he market liquidity and pricing” UK” income market, which is worth India for Indian entities and will USD 1.3 trillion and is a vital work jointly on the development source of finance for the of a wide range of new infrastructure sector” products. Through this Announcement collaboration both parties also demonstrate their commitment to the promotion of products and platforms supporting the use of Green Finance” Page 6
LSE – Helping to Raise Your International Profile • Listing in a global market such as London raises a company’s international profile. • LSE is home to the deepest global foreign exchange centre. • • High international regulatory standards ensure access to a globally oriented investor base LSE markets are supported by a network of 350 member firms from over 20 countries*, Selected Major Institutional Investors in London Listed Bonds Americas Europe • Capital Research • Blackrock • Vanguard • Legal & General • SSgA Funds • Scottish Widows • Fidelity • Invesco • Blackrock • M&G • Thornburg Investment • Standard Life • Artisan Partners • Asia Pacific AXA • Alliance Bernstein • • Societe Generale State Administration of Foreign • T. Rowe Price • Alecta Pension Exchange (China) • Caisse de dépôt et • • DWS Investment GIC placement du Québec • • Swedbank Robur BNY Mellon Hong Kong • Itau Unibanco Brazil • • Allianz Global Investors Blackrock Japan • • BNP Paribas Mitsubishi UFJ Trust • • Union Investment Sumitomo Mitsui • Privatfonds GMBH Aberdeen Asset Management • Norges Bank Asia Africa and Middle East • Hang Seng Investment • QIA • P.I.C South Africa • Kuwait Investment Authority • Investec • CCB Islamic Bank • Abu Dhabi Investment Authority -11 -10 10 11 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 London trading hours GMT Source: Factset *LSEG, as of September 2015 7 Page 7
The Current Status of the Masala Bond Market: London Stock Exchange listings … 33 …raising 14 …from 6 $2.01bn Masala bonds Masala bonds issuers… currently listed… listed historically… in total Maturities Trading Coupons Maturities showing issuance A range of secondary trading Financing possible at attractive volumes across tenors markets available issuance yields Issuance by Maturity (%) 6.45% 6.20% Order book trading 6.08% 2% < 3yrs Continuous market making 11% 12% 3-5yrs End-of-day pricing 10-15yrs Trade reporting Average 3yr 5yr 15yrs+ 75% Average Coupon (active Masala bonds) Source: Bloomberg and LSEG. Averages are arithmetic means of one or more coupons. This does not constitute investment advice. Includes supranationals Page 8
Masala Bond Case Studies Page 9
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