ADB raises 85.05 million Georgian Lari in offshore Bond Market

The Asian Development Bank (ADB) has raised 85.05 million lari ($28.6 million) from its first Georgian lari-denominated bonds issued in the offshore market.

The bonds pay a floating rate coupon based on the 6-month Tbilisi Interbank Rate (TIBR), a risk-free benchmark interest rate introduced by the National Bank of Georgia (NBG) in March 2019 as a credible and transparent index that market participants can use in cash and derivative contracts. The term TIBR rates are calculated using backward-looking term rate compounding methodology linked to the historical overnight TIBR index.

“ADB is a strong supporter of local currency bond markets,” said ADB Treasurer Mr. Pierre Van Peteghem. “Not only does this bond issue contribute to the diversity of ADB’s local currency funding operations, but it also mobilizes investment from international savings pools while supporting a broader recognition and adoption of Georgia’s new risk-free benchmark interest rate.”

The issue is structured as a linker bond denominated in Georgian lari but settled in US dollars, and is documented under ADB’s Global Medium-Term Note program, subject to English law, settled in Clearstream and Euroclear and listed on the Luxembourg Stock Exchange. The bonds feature an amortizing profile with final maturity in July 2021.

ADB has previously relied on bond issuance in the domestic Georgian capital market to support its local currency projects. This time, ADB turned to the offshore market to raise funds from international investors.

The bond issue was arranged by Merrill Lynch International and sold to a single US-based investor.

“NBG welcomes ADB’s continued efforts to support local currency lending in Georgia,” said NBG Vice Governor Mr. Archil Mestvirishvili. “We are also pleased to see new securities issues being linked to TIBR interbank benchmark rate, which has been redesigned in line with latest global trends of risk-free rate reforms. We clearly feel greater interest in lari denominated securities as the currency becomes increasingly popular among emerging market investors.”

ADB is a regular borrower in international bond markets but has also led issuance in developing Asian countries as part of efforts to promote bond markets as an alternative to bank lending. In 2019, ADB has issued bonds in Indian rupees, Indonesian rupiah, Kazakhstan tenge, and Philippine pesos.

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 from the region.