Definition of Masala Bond

Financial Terms Beginning with M

What is a Masala Bond

A Masala bond is a type of debt security issued by an Indian entity outside of the Indian market, denominated in Indian rupees (INR). These bonds enable Indian institutions to attract capital from international investors in the form of local currency.

The name "Masala bond" is inspired by the term "masala," which refers to a mixture of spices commonly used in Indian cuisine. The term is used to differentiate these bonds from other currency-denominated bonds, such as Yankee bonds (issued in the United States), Samurai bonds (issued in Japan) and Eurobonds (issued in the European market).


Why Issue a Masala Bond

By issuing Masala bonds, Indian institutions can raise capital for infrastructure projects, spur domestic growth through borrowing and internationalize the Indian rupee. It is worth noting that the first Masala bonds were issued in 2014 by the International Finance Corporation (IFC), a member of the World Bank Group for Indian infrastructure projects.

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Related Investment Terms

Baklava Bond (Turkey)

Lion City Bond (Singapore)

Shogun Bond (Japan)

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