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p. 28 of 46 BACK | NEXT Section 1: Introduction Section 2: Procedures for Exercising Loan Conversion Options Section 3: Limitations, Restrictions and Establishment of Imprest Account Section 4: Basis for Executing Conversion Transactions A. Certain Definitions Relating to Conversion Transactions B. Conversion Dates C. Failure to Effect Conversion During Execution Period D. Types of Conversion Transactions E. Market Transactions F. Currency Conversion of Unwithdrawn Amounts G. Conversion of Withdrawn Amounts H. Partial Maturity Conversion of Withdrawn Amounts I. Interest Rate Cap or Collar J. Conditional Requests K. Notification of Conversion Transactions L. Interest Payments on Conversion Date Section 5: Specified Rate Fixing (SRF) Section 6: Transaction Fees Section 7: Rounding Convention Used in Conversions

Guidelines for Conversion of Loan Terms for ADB LIBOR-Based Loan Product : Section 4: Basis for Executing Conversion Transactions

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E. Market Transactions

4.7 Any Market Transaction undertaken by ADB in effecting a Conversion will reflect the financial terms for the amount of the Loan to be converted.

4.8 Financial Terms of Interest Rate Conversion: In the case of an Interest Rate Conversion of a portion of the outstanding Loan, the terms of the Interest Hedge Transaction entered into by ADB to effect such Conversion will reflect:

1. the relevant Conversion Period;

2. the interest rate prevailing in the Loan Currency on the Execution Date in respect of such portion of the Loan; and

3. the repayment provisions relating to such portion.

4.9 Financial Terms of Currency Conversion: In the case of a Currency Conversion of a portion of the Loan, the terms of the Currency Hedge Transaction entered into by ADB to effect such conversion will reflect:

1. the relevant Conversion Period;

2. the spot or forward exchange rate between the existing Loan Currency and the Approved Currency into which the portion of the Loan is to be converted, for value on the Conversion Date;

3. the interest rates prevailing in the existing Loan Currency and the Approved Currency on the Execution Date; and

4. the repayment provisions relating to such portion of the Loan.

4.10 Amount of Market Transactions: If ADB undertakes a Market Transaction in respect of a Conversion, ADB may effect a transaction in the financial markets in respect of amounts that are smaller or larger than the amount of the Loan requested to be converted by the Borrower unless, in the opinion of ADB, doing so would have a negative effect on the terms to be obtained by the Borrower for such Conversion. In the event that the amount of the Market Transaction undertaken does not equal the amount of the loan to be converted, the interest and exchange rates of the cap or collar premium obtained under such Market Transactions will be applied to the entire portion of the Loan to be converted.

4.11 One or More Market Transactions: ADB may effect any Conversion in one or more Market Transactions. In the event that ADB effects a Conversion through more than one Market Transaction, ADB will determine the consolidated rate or premium to be applied to the total amount of the Loan to be converted on the basis of the weighted average of the rates or premia obtained in all Market Transactions undertaken to effect such Conversion. The Execution Date will be determined as being the date on which all actions have been taken by ADB to effect the Conversion of the entire amount.

4.12 Adjustments to Market Transactions: In the case of Interest Rate Conversions, ADB will enter into an Interest Hedge Transaction based on the existing interest rate applicable to the amount of the Loan being converted. However, ADB may also undertake an Interest Hedge Transaction based on current market rates then prevailing and adjust the new rate of interest payable by the Borrower to reflect the off-marketness of the rate payable by the Borrower on the Loan prior to the Interest Rate Conversion. Examples of interest rate adjustments are illustrated in Annex B.

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