ADB to Float $200 Million Worth of Rupee-Linked Bonds for Pakistan

The Asian Development Bank on Monday said that it would float rupee-linked bonds worth $200 million for Pakistan to support its external account position.

Recently the bank tweeted, “ADB will issue bonds denominated in Pakistani rupee up to a value of $200 million equivalent to support local currency operations and develop capital markets. Pakistan approved ADB’s issuance of Pakistani rupee-linked bonds.”

Last month the cabinet’s Economic Coordination Committee (ECC) supported the floating of rupee-linked bonds on foreign markets. ECC has allowed the ADB to issue offshore rupee-linked bonds to international investors subject to all codal formalities being completed.

Finance Ministry said in a statement, “The program, according to the recommendation of SBP (State Bank of Pakistan), shall be restricted to maximum of $200 million. The local currency proceeds of the bonds shall be used for financing long term infrastructure and energy projects in Pakistan.”

Fitch Solutions forecasts rupee to average 171.15 versus next year’s US dollar as soft demand from foreign investors for Pakistani assets will continue to cool demand for local currency. Rupee calculated by Fitch Solutions weakened around 7.1% against the US dollar until last month.

The 5-year bond, payable semi-annually with a coupon rate of 0.375 percent per annum and a maturity date of 3 September 2025, was priced at 99.556% to yield 15.4 basis points over the 0.25% US Treasury notes due July 2025.

The Bank of America, Credit Agricole CIB, Citi, and J.P had led the deal. Morgan. Morgan. A syndicate group composed of ANZ, BNP Paribas, DBS Bank Ltd., NATIXIS, and Rabobank was also founded.

With 41% of the bonds issued in Asia; 34% in Europe, Middle East and Africa; and 25% in the Americas, the issue achieved broad primary market distribution. By type of investor 52% of the bonds went to central banks and official bodies, 31% to banks, and 17% to fund managers and other types of investors.

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