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ADB to hike lending rates from July

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Press Trust of India New Delhi

The Asian Development Bank (ADB) today said its lending rates will go up by 0.1 per cent from July 1 for all sovereign borrowers to 0.3 per cent over the Libor, an international reference rate for banks.

The multilateral lender extends financial assistance to developmental projects in various countries at 6-months Libor (London interbank offer rate) plus its "loan charge", which is 0.2 per cent at present.

The bank said in a statement that loan charges will be revised "on new Libor-based loans and local currency loans to sovereign borrowers or borrowers with sovereign guarantees negotiated, on, or after, July 1, 2010". The bank added from July 2011, the lending rates will go up by another 0.1 per cent to 0.4 per cent.

 

It said under the new loan pricing structure, the effective "contractual spread" will be adjusted to 0.4 per cent per annum from July 2011, from the current charge of 0.2 per cent.

An ADB statement said, "The adjustment will be phased in over 2010 and 2011, with the new sovereign loans negotiated from July 1, 2010 to June 30, 2011, carrying an effective contractual spread of 0.3 per cent per annum, and those negotiated, on, or after, July 1, 2011 carrying an effective contractual spread of 0.4 per cent per annum."

It further said sovereign loans will continue to carry a commitment charge of 0.15 per cent, and charges for loans negotiated before July 1 this year will not be affected.

The ADB spokesperson for India told PTI here tonight that during 2009, seven loans amounting to $1.5 billion were approved for the country. For 2010, he said, the projected loan size for India is $1.67 billion. He added that the loans negotiated by up to June 30, 2010 will not be impacted by the hike.

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First Published: Apr 12 2010 | 8:45 PM IST

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