AIIB Prices RMB3 Billion Inaugural Panda Bond

The Asian Infrastructure Investment Bank (AIIB) today successfully priced its inaugural renminbi-denominated Sustainable Development Bond in the China Interbank Bond Market (CIBM). The RMB3 billion issuance has a maturity of 3 years with a coupon rate of 2.40% and carries the Combating COVID-19 label approved by the National Association of Financial Market Institutional Investors.

The issuance received extraordinary support from both onshore and offshore investors (including through the Bond Connect Regime) resulting in a final book size of RMB 8.34 billion. The bonds were 2.78 times oversubscribed by more than 20 investors with 35% allocated to domestic and 65% to international investors.

AIIB is the first Triple-A internationally rated issuer to have entered this market since the release in 2018 of the new panda bond guidelines governing international issuers. The bond is zero percent risk weighted in China, and was priced at 23bps lower than the valuation of China Development Bank Bonds as of close of business June 10, 2020.

“The debut panda bond issuance represents an important milestone for AIIB as we enter the Chinese bond market for the first time,” said AIIB President and Chair of the Board Jin Liqun. “The issuance will raise important capital to facilitate AIIB’s response to COVID-19 in the short term and maintain its commitment to investing in sustainable infrastructure in the long term. As an international organization headquartered in Beijing, AIIB is also playing a role in the internationalization of China’s capital markets by providing both onshore and offshore investors with a very high quality RMB investment. This successful transaction serves as an important benchmark for our future issues in the years ahead.”

AIIB Chief Financial Officer Andrew Cross said: “The successful pricing is another key milestone in AIIB’s funding strategy to be a diversified issuer with access to investors globally. The inaugural issuance highlights global investors’ recognition of the Bank’s high credit quality and commitment to sustainable infrastructure investments in the region and beyond.”

The net proceeds from the sale of the bonds will be included in the ordinary resources of AIIB. They will be used to fund AIIB’s financings, including those under AIIB’s COVID-19 Crisis Recovery Facility (CRF). The CRF was created as part of a coordinated international response to counter the COVID-19 pandemic and to respond flexibly and efficiently to client demands. It has an initial size of USD5-10 billion and is designed to support AIIB members’ urgent economic, financial and public health financing needs as well as to promote a quick recovery from the crisis.

Through end-2019, AIIB has funded two projects in China and, in April 2020, approved a third: an RMB2,485 million loan to upgrade the country’s sustainable public health infrastructure and provide emergency equipment and supplies in response to the COVID-19 pandemic.

Bank of China General Manager of the Investment Banking and Asset Management Department Hu Kun said: “AIIB is the first multilateral development bank (MDB) rated AAA by international credit rating agencies to access the panda bond market in recent years. The successful issuance demonstrates the depth of the CIBM market, while further enhancing the global investor base of AIIB. This bond issue sets the mark for other MDBs and prestigious global issuers to enter what is the second largest bond market in the world in terms of outstanding volume.”

AIIB Treasurer Domenico Nardelli said: “The transaction demonstrates AIIB’s capital strength as well as commitment to strong governance and risk management. We are pleased to diversify our investor base by accessing Chinese onshore investors and providing them with the ability to diversify their high-quality liquid asset portfolios.”

AIIB Head of Funding Martine Mills Hagen said: “The funding team has been dedicated to attaining our panda registration since the end of last year. The pricing achieved is reflective of our very strong credit fundamentals and Triple A ratings from S&P Global Ratings, Moody’s Investor Services and Fitch Ratings. The bond proceeds will be included in AIIB’s ordinary resources, which are used to finance AIIB’s CRF.”

At the end of May 2020, AIIB mandated Bank of China Limited as Lead Underwriter and Bookrunner. BNP Paribas (China) Limited, China Construction Bank Corporation, China International Capital Corporation Limited and HSBC Bank (China) Company Limited acted as joint lead underwriters. Crédit Agricole Corporate and Investment Bank (China) Limited was a financial advisor on sustainability.

This sustainable development bond reflects AIIB’s sustainable nature. The Use of Proceeds in all debt issued to date highlights the Bank’s sustainable mission as well as the strict environmental and social criteria the Bank’s financings must comply with for approval. AIIB’s environmental and social framework is a core element in the Bank’s mission to help our clients meet their commitments under the Paris Agreement and their Sustainable Development Goals.

Bond Summary Terms

About AIIB

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia. Headquartered in Beijing, we began operations in January 2016 and have now grown to 102 approved members worldwide. By investing in sustainable infrastructure and other productive sectors in Asia and beyond, we will better connect people, services and markets that over time will impact the lives of billions and build a better future.

This announcement is for information purposes only. The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any state of the U.S. or any other jurisdiction (other than the registration for offering on the China Interbank Bond Market). No securities may be offered, sold or delivered in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws. No public offering is being made in the United States or in any other jurisdiction where such an offering is restricted or prohibited under the applicable laws or regulations or where such offer would be unlawful. Any offering of securities will be made by means of an offering circular which will contain detailed information about AIIB and its management, as well as its financial information. Neither this announcement nor any portion hereof may be sent or transmitted, directly or indirectly, in or into the U.S. or any jurisdiction where it is restricted or prohibited under the applicable laws or regulations or it is unlawful to do so. No money, securities or other consideration is being solicited by this announcement or the information contained herein and, if sent in response to this announcement or the information contained herein, will not be accepted. Any failure to comply with these restrictions may result in a violation of the Securities Act or the applicable state or local laws of the United States or any other jurisdictions. A rating is not a recommendation to buy, sell or hold the securities and may be subject to revision, suspension, reduction or withdrawal at any time by the rating agency. Neither this announcement nor any information herein nor the fact of its distribution shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.