Masala bonds are Rupee denominated bonds sold to investors and are listed on overseas stock exchanges. "India's largest mortgage lender HDFC opened subscription for its Masala Bonds on Tuesday to find four-five times over-subscription, said three people familiar with the matter till late evening. HDFC is unlikely to pay higher on Masala bonds than what it paid in local markets, said a person familiar with its thinking.Indian companies were permitted to sell Masala Bonds in 2015 by Finance Minister Arun Jaitley, but the concept was mired in difficulty due to tax treatment and worries about liquidity. The initial guidance is that those bonds could be priced at 8.45%, compared with 8.38% it paid to raise Rs. "Masala bond market needs to be kick-started," said Sapan Gupta, National Practice Head, Banking & Finance, Shardul Amarchand Mangaldas & Co. "With HDFC taking the lead with proposed issuance, the state-owned companies shall also join as other global securities have zero or negative yield.

Source: Economic Times July 12, 2016 16:18 UTC