The Asian Development Bank (ADB) has raised 100 million Georgian lari (US$48.54 million) from its first-ever sale of bonds, denominated in the Georgian currency, to support development of the local capital market and smaller businesses throughout Georgia.
“Small enterprises employ nearly half of Georgia’s workforce and getting better access to bank financing will help them to grow, providing more jobs and incomes,” said Pierre Van Peteghem, Treasurer, ADB. “This bond–the largest by a foreign issuer–will provide a key market benchmark and could encourage more borrowers, both domestic and foreign, to tap the Georgian bond market.”
The proceeds of the bond issue will be lent to TBC Bank to provide investment and working capital loans to micro, small and medium-sized enterprises in Georgia. TBC Bank has the largest market share in retail banking in Georgia and the second largest in corporate banking, with total assets of more than 5.4 billion lari, representing 26 percent of the market.
“We are pleased to offer a product that eliminates currency risks and stimulates private investment and employment throughout Georgia,” said Todd Freeland, Director General of ADB’s Private Sector Operations Department.
The issue carries ADB’s AAA credit rating and meets the National Bank of Georgia’s quality requirement as a liquid asset for Georgian banks.
“We are happy to have received the loan made possible by this landmark bond. The transaction will help develop Georgia’s financial sector and we will put the funds to work to promote development of the Georgian economy,” said Vakhtang Butskhrikidze, Chief Executive Officer of TBC Bank.
ADB sold the three-year bonds at a price of par, with a floating rate coupon that resets quarterly, based on the National Bank of Georgia’s three-month Certificate of Deposit. The bonds will mature on 15 February 2018.
Although Georgia is among ADB’s most recent members–joining in 2007– assistance has grown rapidly with public and private sector loans and grant approvals totalling more than US$1.6 billion as of 31 December 2014.
ADB is a regular borrower in the large international bond markets but has also led issuance in developing Asian countries as part of efforts to promote domestic bond markets as an alternative to bank lending. ADB aims to raise US$16 to 18 billion from the bond markets in 2015.