Kerala CM opens LSE for trade amid historic listing of KIIFB's masala bond

Kerala CM opens LSE for trade amid historic listing of KIIFB
Kerala CM, Pinarayi Vijayan at LSE.

London: Kerala Chief Minister Pinarayi Vijayan had the honour of opening the London Stock Exchange (LSE) for trade on Friday.

The occasion also marked the listing of the masala bond of the Kerala Infrastructure Investment Board (KIIFB) on the LSE, one of the oldest stock exchanges in the world.

KIIFB has become the first company of an Indian state to have such a similar privilege.

The Kerala CM received the invitation to open LSE for trade on Friday. He is the first CM from India to receive such an honour.

The KIIFB bond has been listed on LSE with the objective of garnering at least Rs 50,000 crores for basic infrastructure development in the state in the next three years.

The Europe launch of the NRI chit scheme run by the Kerala State Financial Enterprises Limited (KSFE) is also scheduled.

Kerala Finance Minister Thomas Isaac, Chief Secretary Tom Jose and KIIFB CEO K M Abraham participated in the LSE market-opening ceremony.

The KIIFB is a government-owned body that aims to mobilise investment for critical and large infrastructure projects.

London Stock Exchange Headquarters is at Paternoster Square in London. Its market open ceremony take place every day at 8 am.

KIIFB's debut masala bond listing

The KIIFB is the first sub-sovereign entity in India to tap the offshore Rupee international bond market with the USD 312 million equivalent (INR 21.5 billion) senior secured fixed-rate bond and is aimed at accessing capital from international investors for the southern state's infrastructure development.

"KIIFB strives to be at the forefront of creating a sustainable development model for infrastructure financing in the emerging markets and an exemplar for best practices in corporate governance and fund management," said KIIFB CEO K.M. Abraham, who described the development as a milestone for the company and the state of Kerala.

"KIIFB is the first sub-sovereign entity in India to access the international debt capital markets in this manner. This transaction has realised our objective of diversifying our sources of funding by accessing capital from international investors, he said.

The bond, with a five-year tenor and a 9.723 per cent coupon, has been admitted to London Stock Exchange's International Securities Market (ISM).

Darko Hajdukovic, Head of Fixed Income, Funds & Analytics, UK Primary Markets, London Stock Exchange said: "London Stock Exchange warmly congratulates KIIFB on its landmark debut Masala bond. Our markets have enabled issuers to raise over USD 7.5 billion equivalent, allowing Masala bonds to evolve from a specialist segment to a mainstream asset class.

"KIIFB's bond highlights London's status as a leading international financing centre, offering issuers access to the deepest pool of long-term international investor capital as well as best in class listing solutions."

London Stock Exchange claims to be the largest Masala Bond centre globally, with 49 such rupee-denominated bonds listed across its markets.

"The opening of this new listing further enhances London's role as a leading international finance centre, attracting global issuers to its markets and strengthening our relationship with Kerala and India. This is further proof that London is Open as the best city in the world in which to do business," said Rajesh Agrawal, Deputy Mayor of London for Business.

Other major Masala Bond issues at the London Stock Exchange include IREDA's Masala Bond in 2017, the first green Climate Bonds Certified and investment grade rated bond by a financial institution; NTPC's listing in 2016, the world's first Indian green Masala Bond and first Masala Bond by a quasi-sovereign issuer; and HDFC's 2016 listing, the first Masala Bond by an Indian corporate on London Stock Exchange.

A Masala Bond is a rupee-denominated bond issued to overseas investors and are settled in US Dollars and are typically subject to English law.

London Stock Exchange said its International Securities Market (ISM), launched in 2017, has been designed to meet the demands of issuers and investors to improve the effectiveness and competitiveness of the UK primary debt markets, providing greater choice for a variety of fixed income issuers.

(With inputs from PTI.)

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