For example, if one took at face value the stupendous number of Masala bond stories that have been rehashed again and again in recent months, mostly by Indian local media, you would think it was the biggest asset class in the world right now.
Companies appear to be fighting to issue before their competitors in the hope of finding demand. If only it was that easy, because the reality is that not many in the buyside are actually biting just yet.
One of my buddies who works in the treasury team of a Chinese bank recently got a call to see if he would be interested in buying some Masala bonds.
The problem is, my friend’s appetite for the stuff only extends to spices, not bonds. Not because he doesn’t like the credit but simply because of the way his company works. Once he hits his annual return target, which this chap did in October, any extra he brings in will not show up on his performance profile.
So unless he is chummy with the issuer, he has no incentive to buy anything at all. And if he buys Masala bonds, he’ll have to write a longer report than usual justifying it, which he simply couldn’t be bothered to do.
It all comes down to knowing who your buyers are. Because for some investors, having masala filled dishes on the table beats having them as part of the portfolio. Bon appetit!