ADB raises $10mln in 2nd issue of rupee bonds

ISLAMABAD: Asian Development Bank has raised Rs1.6 billion ($10 million) in the second issue of local currency Karakoram bonds of Pakistan from foreign investors, the bank said on Friday.

“ADB sells the second Pak rupee-linked Karakoram bond on 28 Jan priced at Rs1.6 billion 5-year,” ADB said in a tweet. “Building on the strong first outing, SCB [Standard Chartered Bank) placed it with two European investors with proceeds invested into Pakistan government securities.”

The second issue came over two months after the Manila-based lender raised Rs1.8 billion ($11.4 million) through a local currency Karakoram bonds by a multilateral development bank.

Though the bank didn’t specify the rate on the latest bond, the previous offshore bond 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. They were denominated in rupees and settled in US dollars, listed on a major stock exchange and settled through an international central securities depositary.

The bonds are offered in future projects as an alternative to dollar borrowing. ADB’s local currency loans are expected to boost private sector development in Pakistan.

The confidence of bilateral and multilateral financial institutions on Pakistan’s economy has been restoring since the country agreed to the economic reforms of the International Monetary Fund (IMF) in 2019. IMF’s partnership is analogous to a health certificate for an economy and that helps in building trust of others and encourages them to capitalise on its resources.

Washington-based IMF agreed to lend $6 billion to support Pakistan’s balance of payment. Though the loan program went into slumber after two tranches in the beginning of the last year, there hasn’t been complete breakup in relationship with the authorities frequently indicating that the IMF was still taken in confidence over the pace of economic restructuring program.

Even so, the IMF didn’t release the third tranche suspended after coronavirus wave, it issued another loan to provide financial assistance to the economy derailed due to lockdown-sparked economic inactivity. The country’s partner international financial institutions, like the World Bank and ADB resumed policy-based loans to Pakistan and that shows the trust on continuation of the economic reforms. Both the lenders presented multiyear loan programs for the country. ADB has already endorsed a new 5-year country partnership strategy to loan an estimated $10 billion to Pakistan for five years. The World Bank also said it supports the country’s priority development objectives under an estimated $12 billion loan program starting from the next fiscal year.