MUMBAI- The World Bank’s lending arm and other global institutions have issued $1.4 billion worth of offshore rupee-denominated bonds so far this year to meet strong demand spurred by India’s inclusion in JP Morgan’s widely tracked emerging market debt index, two banking sources said.
The bond issuance since January is almost half the $3.3 billion issued in all of 2023, said the sources, who actively trade these supranational bonds and who based their tally on data from several financial institutions.
Most of last year’s issuance was in the fourth quarter, the sources said, when foreign investors piled into rupee debt after JP Morgan said India will be part of the Emerging Market Bond Index (EMBI) from June 2024.
These offshore bonds, with maturities ranging from 4 years to 10 years, are denominated in Indian rupees but settled in US dollars, the sources said. They declined to be named as they were not authorized to speak to the media.
The bond yields are usually lower than Indian government bonds. They allow issuers to raise US funds at cheaper rates while giving overseas investors access to rupee debt without having to get a special license to operate onshore or pay local taxes, investment bankers added.
