ADB plans fresh $100mn rupee bond float

Asian Development Bank (ADB) may come out with another rupee bond issue of $100 million before the calendar year, ADB officials said at the sidelines of a press conference here today.

The officials said the issue is contingent upon approval of a project for which funding is to be done. ADB raised Rs 500 crore from India through a 10-year bond at 17 basis point over the gilt yield of 7.37 per cent 2014.

The bond, listed on National Stock Exchange (NSE), got a broad distribution with banks holding over 60 per cent, 2 1 per cent with companies and 19 per cent with mutual funds.

ADB also plans to debut in the markets of China and Thailand. While it has received approval from the Thai Kingdom for raising 4 billion bhat , the Chinese government is reviewing their proposal for 1 billion renminbi.

The money raised in Thailand will be converted back into dollars for funding ADB's operations in Asia, the resources from the Chinese market will be used for restructuring the Chinese banking sector which is laden with non performing assets, the officials said.

Liquin Jin, vice-president, ADB, said this issue has facilitated their entry in the Indian debt market and for this pioneering entry of a supranational body, they have paid a premium even though ADB is AAA rated overseas against the government of India's rating of BB.

Officials added that the interest rate at this point of time works out cheaper if the resources are raised abroad and converted into rupees for onlending.

While ADB has identified three projects for onlending the money raised from the Indian debt market including healthcare, power transmision and housing finance, it has entered into a interest rate swap with the HSBC .Under the swap, ADB will get fixed rate proceeds for ten years while HSBC will have floating interest rate pegged to the one year gilt.

Officials added that swap route of bringing dollars from overseas and converting into rupees will continue along with rupee resources for onlending in India.

ADB will put the rupees in gilts in the transit period before onlending. As far as equity is concerned, ADB has already invested 5.2 per cent in green field project of petronet LNG.

Officials added that it is in lookout for more infrastructure projects and banks for equity participation.