To be known as the Asian Currency Note Program, the ADB said this will serve as the first regional platform de-dicated to issuances of bonds in regional currencies.
It will be Asia’s first multi-currency bond platform since the 1997 financial crisis, and will initially link the domestic capital markets of Singapore, Hong Kong, Malaysia and Thailand.
Under the scheme, Asian currency bonds are issued in their domestic markets under a single unified framework with a common set of documents.
Singapore’s DBS is the regional arranger for the program and sole lead manager and bookrunner for the Singapore dollar issue. The other bookrunners and sole lead managers are HSBC for the Hong Kong dollar issue and Standard Chartered and Bank of Ayudhya for the Thai baht issue.
The inaugural issue will involve S$300-million five-year notes in Singapore and HK$1-billion three-year notes in Hong Kong, to be printed before the end of the week.
ADB also plans to issue 6.5 billion of five- and 10-year Thai baht bonds once approvals are obtained. While the Thai baht notes will not yet be issued under the program, the Thai government has provided its in-principle approval for including Thailand in the program in the very near future.
Similarly, the Malaysian government has signaled its intention to allow ADB to include Malaysia under the program structure.
"The program is a significant milestone for Asian capital market development and for ADB," ADB vice president Khempheng Pholsena said in a statement.
He added that the program is "a logical continuation of ADB’s market-opening transactions in Asian local currency bond markets over the last three years and fully in line with ADB’s support to the ASEAN+3 Bond Market Initiative."
The scheme was established through the close coordination with and support of regulators from Hong Kong, Malaysia, Singapore, and Thailand. It allows a leading issuer like ADB to launch a larger bond issue by tapping several Asian financial markets simultaneously under a single unified framework.
Such a single structure not only provides significant savings in terms of legal and transaction costs, but also allows issuers to tap into regional markets as and when market opportunities arise without the need to seek new approvals for each and every issue.
"We hope that this program will contribute to creating a unified platform which will eventually include the entire region. In our view, the program signals the potential for Asian capital markets to address Asia’s own large funding needs", ADB treasurer Mikio Kashiwagi said.
He noted that the program will allow regional and global issuers to simultaneously tap bond markets in the region expeditiously and contribute significantly to the deepening of bond markets in Asia.
The format of a linked, multi-location, multi-currency financing can be applied to other leading issuers, including Asian or multinational corporate issuers seeking to simultaneously access a large base of investors across Asia’s leading capital markets.