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ADB Plans to Issue Bonds in China

The Asian Development Bank (ADB) is preparing to issue one billion yuan bonds in China, a senior official of the regional development organization said Monday in Beijing.

However, he declined to tell the timetable or detailed practice.

ADB Vice President of Finance and Administration John Lintjer told Xinhua that the plan has been submitted to the Chinese government and will make ADB the first-ever international financial institution allowed to issue bonds in the Chinese domestic market.

The bonds are targeted at Chinese institutional investors and the income will be used in ADB's projects in China, including loans for infrastructure construction, the private sector, financial sector and technological assistance, Lintjer said.

He said all the agency's loan borrowers in China repaid on time in the past and the bonds will be of no risks.

The bonds will be long-term and RMB-denominated, Lintjer said, adding that ADB will issue bonds denominated in local currencies in other Asian countries such as India, Thailand, Indonesia and the Philippines.

The Chinese market expanded by 1000 percent in the past five years, but enterprises still suffer from an undeveloped securities market and mostly rely on bank loans to raise funds.

That has hindered the small and medium-sized enterprises from getting enough money and piled up risks on banks. Meanwhile, over 10 trillion yuan savings in Chinese banks are not used sufficiently.

The ADB's bonds issue will help the Chinese bonds market to better meet the best practiced international standards, Lintjer said.

Capital requirement, tax reduction and exemption, interests policy, credit rating, information disclosure, quota in market and requirement on institute investors are the main questions in issuing bonds in Chinese market, Lintjer said.

Wang Guogang, a researcher of the Chinese Academy of Social Sciences, said allowing an international financial institution to issue RMB-denominated bonds in China will relieve the deposit pressure on banks and reduce the appeal of revaluating the RMB.

(Xinhua News Agency November 18, 2003)

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