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Wednesday, January 14, 2004
ADB launches first local currency swap for RP
MANILA— The Asian Development Bank (ADB) approved yesterday a $200-million cross-currency financing facility for the Philippines in the first arrangement of its kind in the region.
Under the facility, the Manila-based bank swaps foreign convertible currencies with the Philippine government for pesos which are then lent to banks that can re-lend them to selected business sectors, bank officials said.
The foreign currencies involved are the US dollar, euro and the yen.
Pilot
“This is a highly innovative pilot project that aims to promote private sector and capital markets development in the Philippines,” said Ajay Sagar, a senior ADB finance specialist.
“It not only marks the first time that ADB is providing long-term local currency financing in the Philippines. It is also ADB’s first local currency swap with a government,” he told a news conference.
The ADB is considering similar arrangements in other countries, such as Indonesia, Bangladesh, Vietnam and Pakistan, Sagar said.
Relending
International banks with a long-term credit rating of BBB or better can borrow up to $75 million equivalent each under the facility, while local the banks’ maximum borrowing limit will be set at $10 million each.
They may re-lend to businesses in sectors involved in, among other areas, infrastructure development, manufacturing, small and medium enterprises, housing and retailing.
The multilateral agency will also allow loans for restructuring infrastructure projects.
Among the 17 local and foreign banks eligible to participate in the 15-year loan facility are ABN Amro Bank, ANZ Banking Group, Bank of America, Bank of Tokyo Mitsubishi, Citibank, Deutsche Bank, Hong Kong and Shanghai Banking Corp and Standard Chartered Bank. (AFP) |
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