ADB Welcomes First Cross-Border Bond Under ASEAN+3 Bond Framework

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The FINANCIAL — The Asian Development Bank (ADB) on September 28 welcomed the Thai baht bond issued by Japan’s Mizuho Bank, the first bond issue under the ASEAN+3 Multi-Currency Bond Issuance Framework aimed at fostering greater cross-border bond sales in the region.

“We expect this bond to herald more such issuance in the ASEAN+3 region,” said Noritaka Akamatsu, Senior Advisor at ADB. “Opening markets to a wider variety of issuers and investors ultimately makes economies and markets stronger and more stable.”

The framework, part of the ASEAN+3 Bond Market Forum, has standardized bond issuance and investment processes across the region so that borrowers from one country can easily tap markets in other countries, and so investors can easily put their money to work in other countries in the region. It is initially being used in six markets: Hong Kong, China; Japan; Malaysia; the Philippines; Singapore; and Thailand, and is expected to expand to the rest of the region, according to ADB.

Easier local currency financing through the framework reduces the foreign exchange risks that led to the 1997-1998 Asian financial crisis but is also important as increasingly complex supply chains mean companies often have operations in a variety of countries. Meanwhile, Asia’s strong economic growth has meant an accumulation of savings which are best safeguarded by being invested in a diverse portfolio.

ASEAN+3 brings together the 10 countries of the Association of Southeast Asian Nations with the People’s Republic of China, the Republic of Korea, and Japan.

ADB has been supporting the ASEAN+3 Bond Market Forum since it was established in 2010 and acts as its secretariat. ADB has also coordinated the setting up of the multi-currency bond issuance framework, including publication in September of the Single Submission Form which allows borrowers to use one document to issue bonds in a number of currencies rather than one for each country.

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Mizuho Bank’s THB3 billion bond will mature in 2018. Mizuho will use the proceeds to finance its banking operations in Thailand.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.

 

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