IFC, ADB OK'd for bond issuing

国际金融公司和亚洲发展银行同意在大陆发行人民币债券

China yesterday announced the International Finance Corporation (IFC) and the Asian Development Bank (ADB) had been approved to issue their first batch of yuan-denominated bonds on the Chinese mainland, making them the first multilateral financial group to do so on the mainland.

The Ministry of Finance publicized the information on its official website, saying the State Council had approved IFC and ADB's applications to issue the yuan-dominated bonds.

The ministry said the bonds would be named Giant Panda Bonds because according to international practice, a multilateral financial institution always selects the country's mascot as the name for the local currency-dominated bonds.

However, the ministry said the details of the issuing of the bonds, including timing and the amount had to be approved by the People's Bank of China, the country's central bank.

The size and time period of the bonds depends on the market situation at the time of the issue, but a longer time period would be preferable as it could help build the domestic financial market, said Karin M. Finkelston, IFC's Senior Country Manager for China and Mongolia in an interview earlier with China Daily.

"IFC is very grateful for the opportunity to issue bonds in China's domestic capital markets," said IFC Acting Executive Vice-President Assaad Jabre.

"The IFC bond, when issued, will contribute to our broader strategy of helping China develop stronger and deeper domestic capital markets," Jabre said.

IFC also announced the proceeds of IFC's bond issue would be used to finance private sector projects that IFC had already selected and appraised.

Since 1985, IFC has invested more than US$2 billion in 100 private sector companies in China.

As one of IFC's fastest growing client countries, China is the corporation's ninth largest country portfolio. In the 2004 fiscal year, IFC committed US$391 million in 19 projects while the annual commitments in the last three years are about US$100 million. It makes China the largest country programme in the fiscal year 2004. As the private sector arm of the World Bank Group, IFC has been the first, or among the first, non-residents to issue in many currencies. It funds its lending activities by issuing bonds in the international capital markets. The Corporation's securities, which are rated Aaa by Moody's and AAA by S&P, have been issued in 33 different currencies. IFC's funding program for fiscal year 2006 is around US$2 billion.

ADB said that its bonds would be issued in the interbank market through a syndicate of underwriters managed by BOC International (China) Ltd.

"ADB is privileged to be part of this important initiative. This is a major step forward in the development of China's capital market," said Mikio Kashiwagi, ADB's Treasurer.

ADB said it would use the proceeds of the bonds to provide its clients in China with local currency financing.

ADB has a long-standing tradition of undertaking market-opening transactions in the region's domestic bond markets including Japan, Republic of Korea, India, Malaysia and Thailand.

The planned issue will represent another milestone in ADB's quest to develop the region's bond markets