Speech by Vice President Pholsena at the Launch of Asian Currency Note Programme

Khempheng Pholsena
Vice President, Finance and Administration
Asian Development Bank

Oriental Hotel, Singapore
14 September 2006

Good afternoon, Ladies and Gentlemen,

On behalf of the Asian Development Bank, I would like to welcome you to this launch.

Today sees the launch of ADB’s US$10 billion Asian Currency Note Programme that will serve as the first regional platform dedicated to issuances of bonds in regional currencies.

The programme is Asia’s first multi-currency note platform since the 1997 Asian financial crisis that links the domestic capital markets of Singapore and Hong Kong, China, as well as later on Malaysia and Thailand. Under the scheme, Asian currency bonds are issued in their domestic markets under a single unified framework with a common set of documents governed by English law.

The inaugural issue under the programme involves the simultaneous issue by ADB of S$300 million five-year Singapore dollar notes in Singapore and HK$1 billion three-year Hong Kong dollar notes in Hong Kong, China to be printed shortly.

In conjunction with the programme’s launch, ADB plans to issue THB6.5 billion of 5 and 10 year Thai Baht bonds. While the Thai Baht notes will not yet be issued under the programme, the Thai Government has provided its in-principle approval for including Thailand in the programme in the very near future. Similarly, the Malaysian Government has signaled its intention to allow ADB to include Malaysia under the programme structure.

We believe that the programme is a significant milestone for Asian capital market development and for ADB. It is a logical continuation of ADB’s market-opening transactions in Asian local currency bond markets over the last three years and fully in line with ADB’s support to the ASEAN+3 Bond Market Initiative.

DBS is the mandated programme arranger and sole lead manager and bookrunner for the Singapore dollar issue. The sole lead arranger and bookrunner for the Hong Kong dollar issue is Hongkong and Shanghai Banking Corporation. For the Thai Baht issue, the sole lead managers and bookrunners will be Standard Chartered Bank and Bank of Ayudhya.

The programme was established through the close coordination with and support of regulators from Hong Kong, China; Malaysia; Singapore; and Thailand to whom we convey our sincere appreciation.

The programme allows a leading issuer like ADB to launch a larger bond issue by tapping several Asian financial markets simultaneously under a single unified framework. Such a single structure not only provides significant savings in terms of legal and transaction costs, but also allows issuers to tap into regional markets as and when market opportunities arise without the need to seek new approvals for each and every issue.

The development of local currency bond markets is an important strategic imperative for ADB's developing member countries.

One of the key causes of the Asian financial crisis was overdependence on bank financing that forced borrowers to take on excessive short-term foreign exchange exposure to finance long-term projects that could only generate local currency revenues. Such mismatches have proven to be potentially detrimental to economic development, resulting in poor macroeconomic performance that exacerbates poverty. As a consequence of these lessons learned, the development of local currency bond markets has been a key part of ADB's assistance to the ASEAN+3 group, and in particular the ASEAN+3 Bond Market Initiative.

The programme is structured to accommodate other markets in the region as and when the terms are approved by regulators. We expect that other regulators in the region will review the programme structure, recognize the benefits and approve the structure for issuance in their own economies. We would expect that in particular the economies from the ASEAN+3 Bond Market Initiative will look favorably upon the proposed structure as it directly responds to the efforts made under the Initiative to harmonize bond terms, and deepen the local currency bond markets in the region.

In closing, let me once again express our sincere appreciation to the respective governments in the region for their commitment to ensuring the success of this programme. I would also like to commend the programme arranger, DBS Bank, as well as the lead arrangers for the Hong Kong dollar and Thai Baht issues, Hongkong and Shanghai Banking Corporation, Standard Chartered Bank, and Bank of Ayudhya.

Thank you very much for your attention.