An Indian origin international development secretary in the United Kingdom, Alok Sharma, has encouraged Nigeria to issue bonds on the lines of India’s so-called ‘masala bonds’ on the London Stock Exchange to raise funds for infrastructure development.
Introduced in November 2015, Masala bonds are rupee-dominated borrowings issued by Indian bodies in overseas markets. It is initiated chiefly to fund infrastructure projects in India, boost internal growth through borrowings and internationalize the Indian currency.
Since its launch, more than Rs 90 billion have thus far been raised through masala bonds issued by state and private entities.
Sharma, who was recently appointed in the Boris Johnson government, during his first overseas visit to Nigeria last week focused on the success of the ‘masala bonds’.
As minister for Asia in the Foreign Office in 2016-2017, Sharma was instrumental in initiating the ‘masala bonds’.
With an intent to give countries like Nigeria the expertise to develop local currency bonds such as the ‘masala bond’, the UK is considering to provide £1 million through a new partnership. This would enable the country in West Africa to raise funds without taking on the significant risk associated with borrowing in foreign currencies such as U.S. dollars.
Sharma’s department said: “This would build on the success of India’s Masala Bond market in London. Mr. Sharma was part of the team that helped develop the masala bond market in London in his previous role as the Prime Minister’s Infrastructure Envoy to India”.
“This allowed India to raise money on the London Stock Exchange and invest in infrastructure and create jobs,” it added.
The Indian government figures say that currently there are 25 rupee-denominated ‘masala bonds’ on the London Stock Exchange, including those issued by the Kerala Infrastructure Investment Fund Board, Indian Railway Finance Corporation, Indian Power Finance Corporation, Indian Renewable Energy Development Agency, Housing Development Finance Corporation, National Thermal Power Corporation and the National Highways Authority of India.
