ADB issues first Azerbaijan manat bond to finance food supply chain project

Source: ADB

The issue was structured as a currency-linked bond, denominated in Azerbaijan manat but settled in United States dollars. The structure allows ADB to fully mitigate currency risks from its underlying project, and it opens access to a broader investor pool which is only required to mobilize dollars to subscribe to the bonds.  

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

The proceeds of the bond issue will directly finance ADB’s Avrora COVID-19 Staple Food Supply Chain project. The project is providing essential liquidity support to Avrora LLC to sustain its operations and the livelihood of over 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 bond issue in Azerbaijan manat builds on ADB’s strong momentum in local currency financing among Central Asian developing countries, with multiple borrowings and derivative trades already completed in Armenian dram, Georgian lari, Kazakhstan tenge, and Uzbekistan sum,” ADB Treasurer Pierre Van Peteghem said.  

“This deal helps us to implement our goal to access local yields in Azerbaijan with a sustainable use of proceeds by a transparent supranational issuer,” said Capitulum Senior Portfolio Manager Theodor Kirschner. 

ADB’s local currency bond issues not only raise local currency funding to support loans to those borrowers unable to manage the currency risk associated with loans in dollars or euros, but also contribute to capital market development./.