ADB Issues First Azerbaijani Manat Bond

The Asian Development Bank (ADB) has collected nearly 8.4 million Azerbaijani manats (about $4.9 million) in its first bond issue denominated in this Central Asian currency.

The issue was structured as a currency-linked bond, denominated in Azerbaijani manat but settled in US dollars.

This structure allows ADB to fully mitigate the currency risks of its underlying project, and opens up access to a broader set of investors who only have to mobilize dollars to underwrite the bonds.

The 2.5-year bond pays a fixed interest rate of 6% and is listed on the Luxembourg Stock Exchange. The issue has been arranged by Goldman Sachs International and fully subscribed by Capitulum Asset Management GmbH.

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The proceeds of the issuance will directly finance the Avrora COVID-19 project of the ADB staple food supply chain. The project provides essential liquidity to Avrora LLC to maintain its operations and the livelihoods of more than 2,600 employees.

The project also supports gender inclusion and contributes to food security with the production and distribution of wheat and dairy products.

“This new Azerbaijani manat bond issue builds on ADB’s strong push into local currency financing among developing countries in Central Asia, with multiple loans and derivatives operations already completed in Armenian dram, Georgian lari, Kazakh tenge and Uzbek sum,” said Pierre Van Peteghem, ADB treasurer.

“This transaction helps us implement our goal of accessing local returns in Azerbaijan with sustainable use of proceeds from a transparent supranational issuer,” said Theodor Kirschner, Principal Portfolio Manager at Capitulum.

ADB’s local currency bond issues not only raise local currency financing to support loans to borrowers who cannot manage the foreign exchange risk associated with dollar or euro loans, but also contribute to the development of the capital market.