China-backed Asian Infrastructure Investment Bank raises US$2.5 billion from bond sale in London
- British capital, US dollar ‘made sense’ for first issue, but lender will consider local currency issuances elsewhere in the world in the future, president says
- Inaugural sale attracts more than US$4.4 billion in orders from over 90 bidders
The AIIB raised US$2.5 billion from the sale of the five-year bonds, after attracting orders of more than US$4.4 billion from over 90 bidders in 27 countries, it said in a statement.
The funds will be used to “drive AIIB’s priorities of investing in sustainable infrastructure, developing cross-border connectivity, and promoting environmental, social and governance investing in emerging Asia”, it said.
Bank president Jin Liqun said in an interview on Friday that London “made a lot of sense” as the venue for the first bond sale.
“London’s established international capital market is the right place for us to have our listing,” he said.
While the bank had a strong capital base – nearly half the investors on Thursday were from Asia – the time was ripe to tap into the international dollar market, Jin said.
“But moving forward, we will be able to do this in other markets.”
Now in its fourth year of operation, the AIIB has 97 members and has provided more than US$7.9 billion in project funding, mostly in Asia.
“The US dollar will remain the major currency of our lending, but in response to the requests by a number of major borrowers, we will certainly try to tap into the local currency market,” Jin said.
“Given the capacity building of the AIIB, no later than early 2020 we will be able to tap the Indian rupee market, to be followed by local currency bond issues in other countries.”
The development bank’s biggest borrowers to date are India, Indonesia, Pakistan, Bangladesh and Turkey, but Jin said that Malaysia, Thailand and Vietnam are also ready to receive more funding.
“Step by step, we will develop our presence in local markets for the major borrowers,” Jin said.
When asked about the bank’s capacity to help Asia nations deal with economic shocks resulting from the trade war between the United States and China, Jin said he believed investment could help in some cases.
“Trade disputes create uncertainty, which is why we hope they can be resolved as soon as possible,” he said.
Jin said the bank was also working on a strategy for digital infrastructure investment, with the preliminary focus on digital transport, including fibre, satellite, data storage centres and telecoms services.
AIIB to finance projects worth US$4 billion this year
On the subject of the bidding process for project financing, Jin said the AIIB followed international standards that were “open and transparent, keeping everything in the sunlight”.
“All the contracts must go through this bidding and we treat every bidder fairly,” he said. “We have no right to reject or give special preference to anyone.”
He said the AIIB was also open to new members, saying it “keeps the door open”.
“Any country which is interested in joining can apply to be approved by the shareholders,” he said.
AIIB ready to ‘scale up’ to meet investment downturn
In terms of cross-border connectivity and investment, the AIIB “to some extent” shared the same objectives as China’s grand plan for trade and infrastructure development known as the “Belt and Road Initiative”, Jin said.
“We process the projects by three basic standards: financial sustainability, environmental improvement and social acceptance,” he said.
“If you tell me, this is a belt and road project, my answer is, well if we are involved, we can improve the quality. We can enhance the quality and credibility. But we don’t fix labels.
“If we did not operate by very high standards – if the bank was opaque, not transparent, and we had governance problems – nobody would join us”.
