ADB puts off rupee bond float

The Asian Development Bank has put on hold its plans to raise rupee-denominated bonds in the Indian market due to a rise in domestic interest rates, a senior official at the multilateral funding agency said.

"Based on cost and market considerations, we are not considering (rupee-denominated) bond issuance at the moment," ADB Assistant Treasurer Juanito Limandibrata said.

"Instead, we have been raising rupee mainly through cross-currency swaps," Limandibrata said. The official said local currency bonds was unlikely to be considered in India soon unless the market conditions change.

"It is unlikely that we will consider bond issuance soon unless market conditions change and we could achieve better funding terms than those currently available through swaps," he said.

ADB was planning to raise Rs 400 crore based on the current rupee loans in the pipeline, he said. The finance ministry had recently given approval to the ADB to raise money from the Indian markets.

ADB had raised Rs 500 crore from Indian markets in Feb 2004. ADB raised the 10-year rupee loan in 2004 at 5.4 per cent, 17 basis points higher than the yield on 10-year government securities at that time. Currently, the yield on 10-year gilts is around 8.20 per cent.