APD | ADB gets into offshore Philippine PESO bond Market

By APD writer Melo M. Acuna

Manila, Feb.8(APD) – The Asian Development Bank (ADB) has raised P5.2204 billion or US$100 million from a new issue of local currency bonds in the international market.

In a statement, the Asian Development Bank said they issued bonds in the Philippine domestic capital market in 2005 and 2007 but “today’s issue is the first time it has mobilized Philippine peso funding from international investors “through a currency-linked structure.

Currency-linked bonds are denominated in the local currency but settled in US dollars. The bonds pay a fixed interest rate of 5.25% and have a final maturity of 4 years.

The proceeds of the bonds will support ADB’s growing local currency operations in the Philippines and help to reduce foreign exchange risk for ADB’s borrowers.

“ADB is delighted to support the capital markets in the Philippines where ADB is based,” said ADB Treasurer Pierre Van Peteghem. He added their program to issue local currency bonds in ADB member countries has been very successful.

“We hope that the Philippines can become a cornerstone of this program moving forward,” he added.

The bonds, according to the statement, were fully placed with institutional investors in Asia, Europe, and the Americas. JP Morgan acted as the sole lead manager.

ADB is a regular borrower in mainstream international bond markets but has also led issuance in development Asian countries as part of efforts to promote domestic bond markets as an alternative to bank lending. Overall, ADB raised more than US$23.5 billion from the capital markets in 2018. Last month, ADB issued its first domestic bonds in Kazakhstan tenge.

(ASIA PACIFIC DAILY)