On Wednesday, the Asian Infrastructure Investment Bank (AIIB), the Beijing-headquartered multilateral bank that funds infrastructure projects across Asia, announced its first-ever sustainable development bond issued in British pounds.
The GBP 800 million five-year bond is AIIB’s fourth syndicated capital markets benchmark transaction of the year, following successful 5-year and 3-year U.S. dollar-denominated issuances earlier this year, and a so-called “Panda” bond, denominated in renminbi, over the summer.
Net proceeds from the bond sale will support AIIB’s mission of “connecting Asia with the world” through infrastructure investment: fostering sustainable economic development, wealth creation, and improved infrastructure connectivity in Asia, and promoting regional cooperation by working with other multilateral and bilateral development institutions.
According to post-sale data from AIIB, 53.7 percent of Wednesday’s orders came from the U.K., 24.5 percent came from Asia, 12.9 percent from the broader EMEA region (ex-U.K.), and 8.9 percent from the Americas. Central banks and official institutions accounted for just shy of half the investor base, while private and public banks were 28.9 percent, and fund mangers, pension funds and insurers comprised the remaining 21.5 percent.
Per an announcement from the AIIB, the transaction was 1.5 times oversubscribed, drawing GBP 2 billion in orders from 74 global investors.
AIIB Chief Financial Officer Andrew Cross hailed the issuance as another landmark transaction for the Bank, saying, “We are still in the establishment phase of our borrowing program, and therefore every new market is approached strategically and involves very significant investor work to ensure a successful transaction.”
“It was gratifying to see all of the investor work really paying off with so many new investors coming into the book,” said AIIB’s Head of Funding, Martine Mills Hagen. “Hopefully this will be the first of many Sterling transactions and we very much look forward to deepening our relationship with this investor base who clearly share our vision for sustainable development in Asia and beyond.”
“This marks another step towards building a diversified funding program,” added AIIB Treasurer Domenico Nardelli. “With a borrowing program of USD 9 billion for this year and an increasing borrowing requirement going forward, it is essential to establish ourselves in as many markets as possible such that we have a diversified source of funds for the years to come.”
Chief Economist News
Last month, AIIB appointed Swedish economist Erik Berglöf to serve as the Bank’s first-ever Chief Economist. Prior to joining AIIB, Berglöf served as Director of the Institute of Global Affairs at the London School of Economics and as a non-resident Senior Fellow of the Brookings Institution. From 2006-2015, he was Chief Economist of the European Bank for Reconstruction and Development, where he helped create and lead the Vienna Initiative, the European crisis response that helped mitigate the economic impact on the continent of the 2008 Global Financial Crisis.