ADB seeks details on its rupee bond plan

KATHMANDU, JUL 01 –

ADB-GatesAsian Development Bank ( ADB ) has once again expressed interest in issuing Nepali rupee bonds.

In a letter to the Finance Ministry, the multilateral lender has asked about prerequisites it has to follow to issue the bonds, according to Nawaraj Bhandari, joint secretary at the ministry. “ ADB has, however, not mentioned anything about the size of the bonds to be issued,” he said.

ADB had for the first time proposed local currency bond issuance four years ago. It is one of the two institutions, another being the International Finance Corporation ( IFC ), to make such a proposal.

IFC has already received the government’s approval issue rupee bonds worth $500 million over the next five years. It will be the first institution to issue such bonds.

However, ADB had been passive on the matter, stating projects have not been identified to make investment from the money collected through the bond issuance.

“We are sending a letter to ADB in the next one-two days asking it to come up with the size of the bond issuance and specific projects they are interested in investing in,’ said Bhandari, adding the conditions for the rupee bond issuance will be as per the government’s guideline.

The guideline says any international financial institution with AAA rating can issue Nepali rupee bonds. It says they can invest in sectors like hydropower, agriculture, road, tourism and infrastructure.

As banks and financial institutions in Nepal have limited strength to finance big infrastructure projects for a longer term, such bonds are expected to ease financing problems for such projects.

In order to assure investors about the investment safety, the bond issuer has to publish its prospectus. The issuer can make interest payment to investors on a half-yearly basis through their local agents or market makers, according to the guideline.