Rs1.83 billion ($11.4 million) has been raised by the Asian Development Bank (ADB) in a first issue of local currency Karakoram bonds by a multilateral development bank of which Pakistan is a member.
Karakoram bond is an offshore bond denominated in Pakistan rupees and settled in US dollars, listed on a major stock exchange and settled via an international central securities depositary.
According to the report, the international bond issue pays a 7.50% semi-annual coupon and matures in August 2023. The bonds were arranged by Citigroup Global Markets and sold to European asset managers.
Net proceeds from the sale of the bond will be included in ADB’s ordinary capital resources. Previously, the ADB had no local currency loans in Pakistan, but this option will be offered in future projects as an alternative to dollar borrowing. It is anticipated that ADB’s local currency loans will be a boost to private sector development in Pakistan.
ADB Treasurer Pierre Van Peteghem stated, “Engineering local currency solutions is both an art and a science. Not only must we marry investor demand with market conditions to achieve optimal currency and interest rates, but we must also dedicate time and resources to a close dialogue with the government to achieve the best possible outcome.”
Adviser to Prime Minister on Finance and Revenue Abdul Hafeez Shaikh said, “The Pakistan rupee-linked Karakoram bond floated by the ADB is an excellent initiative. I am confident it will have significant mutually beneficial outcomes for Pakistan and the ADB.”