ADB raises $11.4mn in first issue of Pak rupee linked bonds

ISLAMABAD: The Asian Development Bank (ADB) has raised Rs1.83 billion ($11.4 million) in a first issue of local currency Karakoram bonds by a multilateral development bank of which Pakistan is a member.
A Karakoram bond is an offshore bond denominated in Pakistan rupees and settled in US dollars, listed on a major stock exchange and settled through an international central securities depositary, said a press statement issued here on Wednesday.
The international bond issue pays a 7.50 percent semi-annual coupon and matures in August 2023. The bonds were arranged by Citigroup Global Markets and sold to European asset managers.
The net proceeds from the sale of the bond issue will be included in ADB’s ordinary capital resources. Previously, ADB had no local currency loans in Pakistan, but this option will be offered in future projects as an alternative to dollar borrowing. It is anticipated that ADB’s local currency loans will be a boost to private sector development in Pakistan.
“Engineering local currency solutions is both an art and a science,” said ADB Treasurer Pierre Van Peteghem. “Not only must we marry investor demand with market conditions to achieve optimal currency and interest rates, but we must also dedicate time and resources to a close dialogue with the government to achieve the best possible outcome.”
“The Pakistan rupee-linked Karakoram bond floated by ADB is an excellent initiative. I am confident it will have significant mutually beneficial outcomes for Pakistan and ADB,” said Adviser to Pakistan’s Prime Minister on Finance and Revenue Abdul Hafeez Shaikh.
State Bank of Pakistan Governor Reza Baqir congratulated the ADB team and affirmed his appreciation of ADB’s support for Pakistan’s financial and economic development. “ADB’s inaugural issue of Pakistan rupee-linked karakoram bonds will help deepen the capital markets of Pakistan while channeling funding to vital economic sectors,” he said.
The ADB appreciates the support provided by the State Bank of Pakistan to facilitate coordination with the government to successfully start this program. ADB is a regular borrower in the mainstream international bond markets. It has also led issuances in developing Asian countries as part of its efforts to promote local currency bond markets as an alternative to bank lending. ADB has already issued local currency bonds in Indian rupees, Kazakhstan tenge, and Mongolian togrog in 2020.
Meanwhile, Asian Development Bank (ADB) Vice President Shixin Chen has reaffirmed ADB’s support for Pakistan’s development efforts and coronavirus disease (COVID-19) pandemic response during a series of virtual meetings with senior Pakistan government officials.
In a series of meetings from October 27 to November 17, Chen met with Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh, Federal Minister for Economic Affairs and ADB Governor Makhdoom Khusro Bakhtiar, Pakistan’s Minister for Planning, Development & Special Initiatives Asad Umar, Federal Minister for Energy Omar Ayub, Governor of the State Bank of Pakistan Reza Baqir, and Special Assistant of Pakistan’s Prime Minister and Federal Minister for Poverty Alleviation and Social Safety Protection Sania Nishtar, among other senior officials and development partners, said a press statement issued here on Wednesday. – TLTP