MANILA, PHILIPPINES - The Asian Development Bank (ADB) has introduced maturity-based pricing on new LIBOR-based loans to sovereign borrowers or with sovereign guarantees, and local currency loans with sovereign guarantees, for which loan negotiations are completed on, or after, 1 April 2012.
Under the new pricing structure, loans with an average loan maturity of up to 13 years will not attract a maturity premium. Loans with an average loan maturity of greater than 13 years and up to 16 years will be charged a maturity premium of 10 basis points per annum. Loans with an average loan maturity of greater than 16 years and up to 19 years will be charged a maturity premium of 20 basis points per annum. The maturity premium will be added to the contractual spread of 0.4% per annum and will be applied for the life of the loan. In addition, ADB has introduced a cap on average loan maturity of 19 years. Average loan maturity is defined as the weighted average time to repay a loan.
"The introduction of maturity-based pricing reflects ADB's continuous commitment to safeguard ADB's financial strength based on sound banking principles, while striving to provide resources for development lending at the lowest and most stable funding costs and on the most reasonable terms," said ADB Deputy Treasurer Kazuki Fukunaga.