Clifford Chance

Clifford Chance advises on Indiabulls' US$200 million Masala bonds

Leading international law firm Clifford Chance acted as the sole counsel to the bookrunners: Axis Bank, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Nomura and Yes Bank, on Indiabulls Housing Finance's US$200 million (Rs13.3 billion) senior secured synthetic notes listed on the Singapore Stock Exchange. The notes are denominated in Indian Rupees, but trade and settle in U.S. dollars. This is only the fourth Masala bond issued following the adoption of rules by the Reserve Bank of India allowing Indian companies to raise offshore Rupee-denominated financing in the international debt capital markets. This issue represents the first asset-backed issue by an Indian housing finance company, and the first to list exclusively on the Singapore Stock Exchange.

Partner Rahul Guptan led the team and said, "We are delighted to have assisted Indiabulls Housing Finance and its banking team on this landmark transaction. In light of tight liquidity conditions in the onshore banking market in India, the effective opening of the masala bond market has provided a new and innovative mechanism for Indian companies, and particularly non-banking finance companies that do not have the benefit of a deposit base, to access funding. The reduction in the minimum average maturity (from five years to three) means that Noteholders are now able to hedge their INR exposure in the INR-USD currency swap market more effectively, so we expect to see a number of these transactions come to market in the near future."

Counsel Gareth Deiner added, "This transaction is a good example not only of Clifford Chance's depth and breadth of experience across Indian international capital markets transactions generally, but also highlights the firm's ability to advise on innovative product-specific capital market structures, and in this case, not only the USD-INR offshore synthetic settlement mechanism, but also the ability for the Noteholders to rely on the unique onshore security over the Issuer's receivables. This structure is a first, and certainly one which can pave the way for similar NBFC issuers to tap this market."

Rahul was assisted by Gareth, associate Kenneth Teo and trainee Soojean Choi.

Partner Matt Fairclough, consultant James Booth and senior associate Michael Weaver acted for Citicorp International Limited as trustee for the Noteholders.

Clifford Chance has advised on a number of Indiabulls Group related transactions including: Indiabulls Housing Finance's US$600 million share placement in 2015; and Indiabulls Real Estate's $175 million high yield offering in 2014.