CM slams allegations against masala bonds

Thiruvananthapuram/Kannur: Chief minister Pinarayi Vijayan reiterated that the masala bonds have been floated at lower interests and the opposition allegations are totally baseless.
Meanwhile, the Congress has decided to use the row over KIIFB Masala Bond as a weapon against the LDF government and the CPM, and demanded that chief minister Pinarayi Vijayan and finance minister Thomas Isaac should reveal the details instead of keeping it a secret, as the people have the right to know.

“The interest has been fixed based on the rating and the 9.72% is the best lower interest rate fixed by KIIFB,’’ said the chief minister.

He also ridiculed the allegation made by Ramesh Chennithala against the Canadian company. “The state government has no responsibility to inquire into the investments made by the Canadian company. There is no need for us to consider all these things. They have money and they are investing in our bonds which we are using for development projects,” said Vijayan while speaking at an election convention in Thiruvananthapuram.

Ramesh Chennithala, while speaking to reporters in Kannur said, “We have the right to know the terms and conditions and also the reason why the bond was issued to them at a higher interest rate, which would cause a huge loss to the exchequer.”

Though the government had created the impression that the bond has been issued for 25 years, the London Stock Exchange website shows that the bond was for five years, and in that case, the fund would have to be returned even before the completion of the projects utilizing it, which would be disastrous, said Chennithala. He also said finance minister T M Thomas Isaacwas trying to ridicule those who asked questions, instead of giving the details.

Meanwhile, KIIFB chief executive officer K M Abraham said that masala bonds of KIIFB were listed in London Stock Exchange in September 2018. After this, about 40 foreign agencies had evinced interest in the bonds but the names of these agencies could not be revealed. The KIIFB representatives had four rounds of discussions with the CDPQ authorities before finalizing the investment.

He also refuted the allegations that high amount of commission was involved in selecting the Canadian company. There was no element of commission in this investment, he added.

He said the interest rate was fixed based on the rating fixed by the international agencies.

“The investors with AAA rating only have access to masala bonds. But our rating was BB. For every notch that we go below AAA we will have to pay an extra 5%. Hence this is the best available interest rate for us. With BB rating we are not supposed to get the same interest rate of AAA category, Abraham added.