ADB welcomes PHP1 billion bond under ASEAN+3 Multi-Currency Bond Issuance Framework

Tuesday, 20/11/2018 10:12
(CPV) - ADB welcomed the PHP1 billion bond issued by AEON Credit Service (Philippines) Inc. (AEON Philippines) on November 19th 2018. The bond is the first in the Philippines guaranteed by the Credit Guarantee and Investment Facility (CGIF) and issued under the ASEAN+3 Multi-Currency Bond Issuance Framework (AMBIF).

“We hope that this pilot bond will pave the way for similar bond issues going forward,” said ADB Chief Economist Mr. Yasuyuki Sawada. “Vibrant local currency bond markets provide valuable alternative sources of funding for companies while borrowing in local rather than foreign currencies strengthens the overall stability of the domestic financial sector.”

The AEON Philippines’ bond, offered in two tranches will mature in 2021 and 2023, respectively. AEON Philippines, a financing firm, is part of the AEON Group of Companies through Japan-based bank holding company AEON Financial Service Co., Ltd. The company will use the proceeds to provide tricycle loans and personal loans, as well as financial services for the purchase of consumer products such as home appliances, furniture, electronics, and other consumer products, focusing particularly on the unbanked population and those with limited access to financial services.

“We welcome the first CGIF-guaranteed AMBIF bond in the Philippines. The issuance not only supports the development of the Philippine bond market but also ASEAN’s efforts toward financial integration,” said Mr. Ephyro Luis B. Amatong, Supervising Commissioner for Markets and Securities Regulation at the Securities and Exchange Commission of the Philippines.

The CGIF was established in 2010 by the 10 members of ASEAN plus the People’s Republic of China, Japan, the Republic of Korea (ASEAN+3), and ADB to provide guarantees on local currency-denominated corporate bonds issued in the region.

The AMBIF is a set of common market practices including standard bond issuance documentation that allow borrowers to tap different markets using the same paperwork and processes. The framework was conceived under the Asian Bond Markets Initiative (ABMI), a joint effort by ASEAN+3 to promote local currency bond market development. The Philippines Securities and Exchange Commission adopted the framework from its inception in September 2015.

ADB is a contributor to the CGIF, acts as the Secretariat to ABMI, and has long worked with ASEAN+3 policymakers to establish AMBIF. The CGIF, AMBIF, and ABMI were established to support development of active long-term local currency bond markets so borrowers can avoid the currency and maturity bond mismatches that caused the 1997–1998 Asian Financial Crisis.

Khac Kien

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