ADB carries out first issue of bonds in Azerbaijani manats

11:00 - 24 January 2023

January 24, Fineko/ The Asian Development Bank (ADB) has raised almost AZN 8.4 million (around $4.9 million) in its first bond issue denominated in this Central Asian currency.

ABC.AZ reports, referring to the ADB that the issue was structured as a currency-linked bond, denominated in Azerbaijan manat but settled in United States dollars. The structure allows ADB to fully mitigate currency risks from its underlying project, and it opens access to a broader investor pool which is only required to mobilize dollars to subscribe to the bonds.

The 2.5-year bond pays a fixed interest rate of 6% and is listed on the Luxembourg Stock Exchange. The bond was arranged by Goldman Sachs International and fully subscribed by Capitulum Asset Management GmbH.

The proceeds of the bond issue will directly finance ADB’s Avrora COVID-19 Staple Food Supply Chain project. The project is providing essential liquidity support to Avrora LLC to sustain its operations and the livelihood of over 2,600 employees. The project also supports gender inclusion and contributes to food security with the production and distribution of wheat and dairy products.

“This deal helps us to implement our goal to access local yields in Azerbaijan with a sustainable use of proceeds by a transparent supranational issuer,” said Capitulum Senior Portfolio Manager Theodor Kirschner.

ADB’s local currency bond issues not only raise local currency funding to support loans to those borrowers unable to manage the currency risk associated with loans in dollars or euros, but also contribute to capital market development.