(The International Finance…)
WASHINGTON DC: Anyone for Tandoori bonds? A wideranging search is on for a name with positive image associations for offshore rupee bonds, something as memorable as, say, Japanese Samurai bonds or Brazilian Samba bonds.
The shortlist includes, apart from the delicacy mentioned above, Peacock, Ganga and Tiger, anything that evokes an image of India. The hunt continues.
The International Finance Corporation (IFC) launched India's first offshore rupee bond issue, which looks to raise $1 billion, in Washington DC on Wednesday. The issue marks a key step in the "process of internationalisation of rupee bond market," Economic Affairs Secretary Arvind Mayaram said.
"This is the first time we are testing how global rupee bond issuance is accepted by the world." The government has endorsed and backed the offering that will open for subscription in a few weeks.
Local currency bonds of most countries have a name that carries strong associations, a tradition that the IFC and India are keen to establish from the very beginning, instead of letting the market do the christening. India had in July 2010 approved a symbol for rupee, joining select global currencies such as the dollar and the pound.
It allows the currency to be distinguished from the rupees of countries such as Pakistan, Nepal and Sri Lanka, or even the rupiah of Indonesia.
Having a name solidly evocative of India will take forward the process of establishing the currency globally.
Chinese renminbi-denominated bonds issued in Hong Kong are popularly known as Dim Sum bonds, a reference to the popular Cantonese dumplings that are also known as momos in India. These bonds were first issued in 2007.
US dollar-denominated bonds issued by a non-US entity in the US are usually referred to as Yankee bonds. Australian dollar-denominated bonds are Kangaroo bonds. Foreign currency denominated bonds issued to Japanese investors are Uridashi bonds, while Sharia-compliant bonds are called Sukuks.
IFC will draw up a list of possible names for the bonds and then sound out the government before launching its road shows. The bonds will be priced in rupees and all transactions will be in the currency but the proceeds will flow back to India in the form of much-needed dollars. The government is keen that the name evokes a positive image, strikes a chord with foreign investors and isn't frivolous.
Still, naming a bond after a marsupial or a tasty dumpling hasn't really affected how it's perceived, so it will be interesting to see what name the government picks and, more importantly, whether it will stick.