ADB’s first Green bond

This year’s Asian Development Bank annual meeting takes place on the European side of the Caspian Sea in Baku, Azerbaijan. While that may seem an odd choice for the Manila-based institution, it does provide an excellent backdrop for many of the talking points troubling the more Eastern parts of Asia. For one, Azerbaijan is extremely exposed to falls in oil prices. As it relies on oil and gas for 95% of export revenues, last year’s plunge in crude prices forced policymakers into a reality check. The Azeri government is redoubling its efforts...

The Asian Development Bank’s president has been busy. Since taking over the helm in April 2013, Takehiko Nakao has overseen a strategic review, revamped the bank’s management structure and won backing for a groundbreaking capital restructuring. One subject, however, threatens to overshadow those achievements. China is pressing ahead with a separate development bank and has scored a diplomatic coup in winning the support of most of the ADB’s existing shareholders. Debate is intense within the development community. Will the Asian...

The Asian Infrastructure Investment Bank is quickly taking shape after countries from the UK to Myanmar applied to join as founding members ahead of a March 31 deadline. The new, China-led bank now has a staff of 35 and has launched its own website, but several questions remain unanswered. Who is on board? As of April 15, 57 countries had applied to be founding members of the AIIB, according to its website. The notable holdouts are the US and Japan, the two biggest shareholders of the ADB. Other countries can still join as voting members, but...

The global capital markets are developing a taste for socially responsible investments. Issuers from the World Bank to French recycler Paprec have sold so-called Green bonds this year, taking advantage of growing demand from portfolio managers eager for their money to generate more than just returns. Asia, notably India, has shown an interest, too. However, it begs the question, does the growing global enthusiasm mark a mindset change that can benefit the region? Bindhu Lohani, ADB vice president for knowledge management and sustainable...

GCF: Global Climate Fund. With US$10.2bn pledged as of December 2014, it is the world’s largest dedicated climate fund, and the flagship financing vehicle under the United Nations Framework Convention on Climate Change. GCF is headquartered in Songdo, South Korea, and is administered on an interim basis by the World Bank. The biggest pledges have come from the US at US$3bn and Japan at US$1.5bn. Germany, France and the UK have promised about US$1bn each. The UN has a goal of mobilising US$100bn of climate finance a year by 2020. Once accredited...

Plunging oil prices may be a boon for Asia’s energy importers, but they also highlight the region’s exposure to global forces well outside its control. This year’s ADB annual meeting takes place against an uncertain backdrop, with rate hikes looming in the US, China’s economy slowing, Greece testing the eurozone’s resilience and geopolitical tensions rumbling in Russia and the Middle East. One of these – or any other unforeseen event – has the potential to reshape global capital flows and send investors fleeing from Asia’s emerging markets....

Conventional wisdom says that lower oil prices should benefit Asia. As most countries in the region are net importers of oil and gas, they stand to save on energy bills, while those that run expensive fuel subsidies are enjoying a double lift. However, the slump in global energy prices has also presented a rare opportunity for policymakers to boost development agendas. Diverting oil savings into infrastructure and social projects allows cheaper energy to be a catalyst for faster development. “When commodity prices are high, we notice that...

Delhi International Airport put project bonds firmly on the global radar in late January, when it refinanced project loans with a hugely popular US$289m seven-year secured note. Priced to yield 6.125%, the offering drew orders of over US$5bn and marked one of the first overseas high-yield issues of the year from Asia, coming as default fears had left Chinese property companies frozen out of international markets. Most importantly, it pointed to the potential for infrastructure financing in the capital markets, opening a new connection between...

The Japanese yen presents an attractive option for international borrowers, offering ultra-low yields in a depreciating currency. So far, Asian issuers have been rare visitors to the yen debt capital markets, but recent activity suggests this may be about to change. The Abenomics regime, the brainchild of Prime Minister Shinzo Abe, has created a bullish structural backdrop for yen issuance, thanks to a massive monetary stimulus, low interest rates and a concerted effort to weaken the yen. As a result, the Samurai issuance in calendar 2014...