Asian Development Bank to offer new debt management products; modifies Libor-based loans

By Laura Lutz

Des Moines, Nov. 16 - Asian Development Bank announced that its board approved the introduction of a set of new debt management products for its developing member countries, including rate and currency swaps. The bank also announced a set of changes to its Libor-based loan products.

The new products will be available for third-party liabilities of sovereign or sovereign-guaranteed borrowers, such as loans from commercial and bilateral financial institutions or outstanding bond issues.

The products will complement the debt management features embedded in the bank's Libor-based loan products, which allow borrowers to choose currencies and interest rates.

Pricing of the debt-management products will be based on the terms that the bank achieves in the international capital markets plus a risk intermediation fee that will depend on the type of swap and be set at a fixed percentage of the bank's sovereign lending spread.

The proposed enhancements to the Libor-based loan products include a wider choice of currencies, more flexible repayment terms, simplified rebate/surcharge calculations and an option for borrowers of the bank's legacy pool loans to convert their loans into the new Libor-based loan product at prevailing market rates.

The commitment fee for project loans will be changed to a flat fee of 35 bps on the full amount of all outstanding loan balances. It is currently 75 bps on a progressive structure.

The changes will be implemented over the next few months, with most available for loans negotiated after Jan. 1.

Asian Development Bank is a Manila-based multilateral development finance institution.

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