International Finance Corp, the World Bank’s investment arm, plans to sell a record US$1 billion worth of rupee bonds offshore to fund its investments as India struggles to lure capital amid the slowest growth in a decade.
The bond sale aims to “strengthen India’s capital markets and attract greater foreign investment in a time of renewed economic uncertainty across the world,” the Washington-based IFC said in a statement yesterday.
India’s rupee has weakened 11% this year, the worst performance in Asia’s emerging economies after the Indonesian rupiah, as its widening current-account deficit makes it more reliant on foreign capital for funding. Foreign investors have cut their holdings of Indian bonds to $25.9 billion as of Oct 8, the lowest since December 2011, official data show.
The bond sale “will help bring depth and diversity to the offshore rupee market and pave the way for an alternative source of funding for Indian companies,” chief executive officer Jin- Yong Cai said in the statement.
India’s economy expanded 5% in the fiscal year ended March, the smallest gain in a decade.
India represents the biggest country exposure in IFC’s investment portfolio, with a total amount of $4.5 billion as of June, said IFC, which focuses on the private sector.
The IFC has sold bonds in 13 local currencies, including the Brazilian real, the Chinese yuan, and the Russian ruble. The lender sold 439 million reais ($199 million) of offshore bonds Oct 7, data compiled by Bloomberg showed.