Asian Infrastructure Investment Bank

China-backed AIIB on track for US dollar bond launch by mid-2018

PUBLISHED : Sunday, 07 January, 2018, 9:29pm
UPDATED : Sunday, 07 January, 2018, 11:02pm

The China-backed Asian Infrastructure Investment Bank (AIIB) may issue its first US dollar-denominated bond by the end of June this year, according to a state media report on Sunday citing the bank’s treasurer Soren Elbech.

The earliest issuance window would be “toward the end of the first half of 2018”, to allow time for certain procedures, including the board of governors’ approval of AIIB’s 2017 financial statements as well as borrowing and swap documentation, Xinhua said citing a statement from Elbech.

Elbech said the minimum size of the bond would be US$1 billion, but as demand for the first bond issue from AIIB might be strong, “we anticipate having to issue a larger size”.

In terms of the bond’s maturity, Elbech said the choice would be between three and five years depending on investor demand at the time, Xinhua reported.

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He said the bank planned to cap its total borrowing volume at US$3 billion in 2018.

In November, AIIB vice-president Thierry de Longuemar told Reuters the inaugural US dollar bond would likely be launched in Europe sometime in 2018.

The development bank received a top-notch credit rating of AAA from Moody’s in June, putting the Beijing-based multilateral lender on par with the World Bank and the Asian Development Bank and paving the way for the bank to sell bonds to international investors.

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The AIIB, which has 80 member countries, was set up by China as its answer to the World Bank to help meet the estimated US$26 trillion need for infrastructure spending in Asia through 2030.

Hong Kong lawmakers gave their support last week to a government proposal to donate US$10 million to a special fund to start research at the China-backed infrastructure bank, as they push for an increased role for the city in return.