India's central bank takes the spice out of Masala bonds

Singapore

NEW guidelines on offshore rupee bonds will put the brakes on the growth of India's Masala bond market, according to debt capital markets (DCM) bankers.

The Reserve Bank of India (RBI) last Wednesday brought the Masala bond market in line with existing rules on external commercial borrowings in other currencies. As a result, Masala bonds must have a minimum original maturity of three years, rising to at least five years for deals over US$50 million, and coupon rates must be no more than 300 basis points over the government curve.