The Asian Infrastructure Investment Bank (AIIB) priced its first global bond on May 10. The five-year bond raised US$2.5 billion and will drive AIIB’s priorities in investing in sustainable infrastructure, developing cross-border connectivity, and promoting environmental, social and governance (ESG) investing in emerging Asia.
AIIB's inaugural transaction in the debt capital markets attracted over 4.4 billion orders from over 90 investors from 27 countries.
The pricing of this bond is the latest milestone for AIIB, now only in its fourth year of operations. The pricing of the global bond highlights investor support for AIIB’s green operating principles as well as recognition of the bank’s efforts to help its clients meet their commitments under the Paris Agreement and the Sustainable Development Goals.
Thierry de Longuemar, AIIB’s chief financial officer, hailed the pricing of the bond as “a landmark transaction for the market". “This bond is reflective of investor demand globally for high quality sustainable investments. AIIB’s outlook has always been global with founding members from Asia, Africa, South America and Europe,” he says.
The inaugural bond benefits from triple-A ratings from Standard & Poor’s, Moody’s and Fitch. AIIB has a Bank of International Settlements 0% risk weighting and its addition to the European Banking Authority’s CRR list of multilateral development banks was recently approved by the European Parliament.
“The growing institutional demand for fiscally sustainable, revenue-positive projects and support for AIIB’s unique operating model is evidenced by the almost US$8 billion of financings already approved by the Bank,” says AIIB president Jin Liqun. “By participating in capital markets, we can harness further financial support from a global investor base, which will enable us to catalyze infrastructure investment and accelerate adoption of ESG Investing Principles in Emerging Asia.”
AIIB funds will focus on, among other things, high-impact investments that promote sustainable development and climate resilient infrastructure. Examples of projects AIIB finances include metro lines in India, clean water projects in Egypt and Indonesia and bringing electricity to rural residents in Bangladesh.
Martine Mills Hagen, head of funding, AIIB, adds: “Today’s bond pricing is a major milestone for AIIB. We have met 250 investors over the last 20 months, and we look forward to continuing our conversations with them as well as increasing our investor base. This inaugural transaction is an important first step in the establishment of a diversified funding program with further issuance to follow suit in the near future.”
Lee Cumbes, managing director, head of public sector at Barclays, says: “Barclays is very proud to lead the inaugural bond for the Asian Infrastructure Investment Bank, helping magnify the entity’s reach and deliver on its potential. This is an impressive first, historic, step towards AIIB’s long term future in the international capital markets, ensuring a presence capable of supporting an important mission in Asia to foster sustainable economic development, create wealth and improve infrastructure connectivity.”
Tanguy Claquin, managing director, global head of sustainable banking at Crédit Agricole CIB, says: “During the preparation of this inaugural bond, AIIB made sure that ESG rating agencies would have the opportunity to understand AIIB’s goal to finance sustainable infrastructure and recognize that it did set up the right governance and organization to reach these goals, including by enshrining these objectives in the bonds Use of Proceeds. This proactive approach on ESG rating agencies has been extremely well received by specialized investors.”
Alf Costanzo, managing director, head of fixed income (Asia) and origination, syndicate and distribution (Europe) at TD Securities, says: “An exceptional beginning to AIIB’s funding program, this debut bond offering reflects the superb credit quality and appeal of AIIB. Fixed income investors across the globe demonstrated their commitment to the multilateral development bank sector through the diversified participation in this deal.”
Lars Humble, managing director, head of SSA Syndicate, says: “We are honored and thrilled to have been involved in the inaugural transaction for AIIB. This landmark transaction is the culmination of a fairly long process involving significant work by the AIIB team and they have been rewarded with such a highly successful transaction, which is a joy to behold. The final pricing outcome of MS+6bps instantly positions AIIB amongst its correct peers as a global supranational.”
Kenneth J. Madill, head of syndicate (EMEA), Debt Capital Markets Centre (EMEA) Bank of China, says: “It is particularly notable that the deal benefited from early indications of interest and anchor orders out of Asia that helped drive the momentum and subsequent pricing of this inaugural landmark global transaction.”