Posted from Suva, Fiji
The Asian Development Bank (ADB) and the Fijian Government have agreed to work together on the planned issue of offshore Fijian dollar-linked bonds by ADB.
Under the initiative, taken during a meeting between ADB Vice-President for Finance and Risk Management Ingrid van Wees and Fijian Attorney General and Economy Minister Aiyaz Sayed-Khaiyum, ADB will seek to mobilise Fijian dollar funding from international investors for investments in Fiji through a currency-linked structure.
Currency-linked bonds are denominated in the local currency of the market they serve.
Development of Capital Markets
ADB is delighted to support the development of Fiji’s capital markets. The initiative marks another milestone in ADB’s support for Fiji and our strategy of delivering local currency funding in developing countries,” ADB Treasurer Pierre Van Peteghem said.
The proceeds of the planned bonds will enable ADB to offer local currency loans in Fiji and help to reduce foreign exchange risk for ADB’s borrowers.
Mr Sayed-Khaiyum said that international financiers have long recognised Fiji as an attractive destination for investment, a reputation that will be bolstered by this new partnership with ADB.
Financial risks removed
“This groundbreaking initiative removes the financial risks and costs associated with overseas currency transactions and conversions. As a result, it will cultivate a more business-friendly bond market and, most importantly, free up more funds for an infusion of private sector investment right here in Fiji,” he said.
ADB is a regular borrower in mainstream international bond markets and has led issuance in developing Asian countries as part of its efforts to promote domestic bond markets as an alternative to bank lending.
The Bank raised more than US$23.5 billion from the capital markets in 2018.
Ms van Wees said that ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.
“In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members, 49 of them from this region,” she said.
Fiji’s Economy Minister Aiyaz Sayed-Khaiyum leading discussions with ADB Vice-President (Finance and Risk Management) Ingrid van Wees in Suva on May 6, 2019 (Picture Supplied)