British Columbia became the first government to issue offshore bonds denominated in India’s currency, as the province plans to boost trade with the world’s fastest-growing major economy.
Canada’s third-largest province priced the January, 2020 masala bonds at a semi-annual yield of 6.62 per cent, according to a statement from the government Thursday. British Columbia raised five billion rupees ($75-million) from the notes, with a coupon of 6.6 per cent.
The market for masala bonds is slowly picking up after potential issuers from India were initially put off by investors seeking premiums to compensate for liquidity and currency risks. Housing Development Finance Corp., India’s biggest mortgage lender, was the first issuer to sell masala securities in July after the Reserve Bank of India last year allowed domestic companies to issue offshore rupee bonds to reduce dependence on foreign currencies including the U.S. dollar.
NTPC Ltd. issued the first green masala bonds last month, raising 20 billion rupees, according to data compiled by Bloomberg.
British Columbia Finance Minister Michael de Jong in April said issuing masala bonds is a “great way to facilitate increased trade,” and the province wants to go first and lead the way. The province used the proceeds to invest in Housing Development Finance, the Indian housing agency.
Mr. de Jong said he plans to travel to India in October with Premier Christy Clark to meet Prime Minister Narendra Modi to enhance trade and promote the province’s lumber, aerospace and film production industries.
“India is a country that I believe Canada has underformed in and all of the ingredients are there for us,” Mr. de Jong said in a phone interview.
British Columbia won’t be a “one-trick pony” and will consider additional bond sales in the Indian market, he said.
HSBC Holdings Plc and TD Securities Inc. managed the province’s bond deal.Report Typo/Error