JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) has raised Rp1 trillion, about $74 million, from a new issue of offshore Indonesian rupiah-linked bonds. The transaction was structured as an 11-year fixed rate bond maturing in December 2028.
The transaction is the first such bond issue from a multilateral development bank of which Indonesia is a shareholder, and the first occasion for a multilateral development bank to raise Indonesian rupiah funding to support local currency loans in the same currency.
“The growth of local currency bond markets is of strategic importance to developing countries in Asia,” said ADB Treasurer Pierre Van Peteghem. “ADB is committed to deepening the pool, extending the tenor, and diversifying the currency mix of local currency available to support our loan operations. We are justifiably delighted that this now extends to Indonesian rupiah.”
Scenaider Siahaan, Director of Financing Strategy and Portfolio at Directorate General of Budget Financing and Risk Management – Ministry of Finance, Republic of Indonesia said, “ADB’s first bond issue in Indonesian rupiah represents an important step in bolstering diversification of infrastructure financing instruments as well as fostering the development of Indonesia’s capital market.”
The bonds, which are denominated in Indonesian rupiah but settled in US dollars, were underwritten by JP Morgan as sole lead manager. The new issue bears a semi-annual coupon of 6.30%. The bonds were placed principally with banks and fund managers in the Americas and Europe.
Proceeds from the bonds will be mobilized to support ADB local currency lending in Indonesia. In 2016, ADB approved $1.256 billion in sovereign loans and $470 million in non-sovereign assistance in Indonesia, the bank’s sixth largest shareholder.
ADB is a regular borrower in mainstream international bond markets but has also led issuance in developing Asian countries as part of efforts to promote domestic bond markets as an alternative to bank lending. Overall, ADB has raised more than $27 billion from the capital markets in 2017.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in co-financing.
Written by Elisa Valenta, email :email@example.com