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NHAI to raise Rs 3,000-cr from Masala bond issue on LSE

13 May 2017

The National Highways Authority of India's first overseas Masala bond issue of Rs1,500 crore mopped up Rs3,000 crore at the London Stock Exchange (LSE).

The bond issue, launched by union transport minister Nitin Gadkari on Thursday, was upsized to Rs3,000 crre in view of the overwhelming response from a wide range of investors.

The issue of the NHAI bond, with an annual yield of 7.30 per cent, marks the largest ever 5-year issuance and the largest inaugural transaction in Masala Bond market.

Asian investors lapped up 60 per cent of the NHAI Masala Bonds with the balance 40 per cent being picked up by European investors.

About 61 per cent of the subscriptions came from fund managers or insurance companies while banks bought 18 per cent and private banks lapped up 21 per cent of the issue.

Some of the leading investors were still showing interest in the NHAI issue and it is likely that NHAI might come with a fresh issue in the near future.  

''India gives the highest priority for infrastructure development. Our economy is the fastest growing in the world. NHAI is a flagship organisation, with AAA rating and we have many big projects to offer,'' Gadkari said at the London Stock Exchange market opening ceremony on Thursday.

''The NHAI is financially a very strong organisation. This is the first time we have entered the Masala Bond market and I am confident that we will get a good response,'' said the road transport, highways and shipping minister.

''The total infrastructure picture in India is changing very rapidly and we need financial support from international investors. We can guarantee that all our projects are economically viable, with good rate of return,'' he said.

Gadkari pointed to a spike in road construction figures, from just 2 kilometres per day when he took charge of the transport ministry to 23 kilometres a day at the end of March this year.

Elaborating on the figures of construction, he said India had 5.2 million kilometres of road length out of which only 96,000 kilometres is the national highway, meaning that 40 per cent of the country's traffic is concentrated on just 2 per cent of the roads.

The government's target is to increase this length from 96,000 kilometres to 2 lakh kilometres, he said.

''The minister is someone who is a visionary, who gets things done. We are now on a roll with Masala Bonds. London is the financial centre of the world and the right place for more Masala Bond issuances,'' said Alok Sharma, the minister for Asia in the UK's Foreign and Commonwealth Office (FCO), at the ceremony.

''This bond will support the largest road building and transport infrastructure programme in the world. There is a huge appetite for investments in Indian infrastructure and confidence in the Indian economy,'' said Nikhil Rathi, CEO of London Stock Exchange plc, who described Gadkari as a ''reformer and innovator.''

According to the London Stock Exchange, there are 38 Masala Bonds currently in the market, raising around $5 billion.

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