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Investment Bank

Investment Bank

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The rapid evolution of the Asian economy has brought considerable growth to the region, but it faces significant issues connected to rampant urbanisation, increased infrastructure needs and climate change.

To meet these challenges head on, the Asian Infrastructure Investment Bank (AIIB) – a multilateral financial institution – was founded in 2016. Its mission is to improve social and economic outcomes in Asia by actively funding sustainable infrastructure projects, and developing cross-border connectivity, through environmental, social and governance (ESG) investing.

“Over the last three and a half years since our inception, AIIB has approved US$8.5 billion in funding for 46 projects in 18 different countries,” says Martine Mills Hagen, Head of Funding, AIIB. The bank has already helped improve transport links, provide reliable access to energy, build flood defences and mitigate air pollution through those projects. And AIIB has even bigger ambitions for the future.

Harnessing the debt capital markets to create opportunity

From now until 2030 Asia will need US$26 trillion in infrastructure spending, and AIIB’s mission is to help fund that gap.

With a US$100 billion capital base, US$20 billion of which is paid-in-capital, the multilateral development bank is extremely liquid. However, having access to capital market funding from a diversified investor base is essential for future borrowing requirements and so in May 2019, AIIB worked with Barclays and other transaction partners on an inaugural global bond issuance. Thanks to high levels of trust in AIIB’s impeccable ESG credentials – and the bank’s triple-A rating for their bond from Moody’s, Standard & Poor’s, and Fitch –  the issuance was a tremendous success.

AIIB's inaugural bond in numbers

After exceptional interest, AIIB’s original target of US$2 billion was increased to US$2.5 billion to accommodate demand from over 90 individual investors from 27 countries. AIIB also benefitted from the bond’s low interest rate and relative pricing, which Barclays helped manage and will set the tone for subsequent issuances.

The important thing for debut transactions is that it is setting the benchmark, the relative value versus other issuers, and we had to get it exactly right
Harry Koppel, Managing Director, Sovereign, Supranationals & Agency, Barclays

Collaboration powered by understanding

The project was a true, global collaboration based on mutual understanding of what AIIB stands for and what it hopes to do. The Barclays specialist coverage team in London worked closely with the Banking team in Asia and the AIIB funding desk to seamlessly coordinate international investor meetings across three continents. This landmark transaction is the culmination of a long process of highly professional preparation by all involved.

 

AIIB's existing projects

Figures correct as at July 2019

I can’t say enough how proud we are to be one of AIIB’s banking partners because of their vision, because of how important it is to deliver on that vison and because of how ESG is just built into their DNA.
Lee Cumbes, Managing Director, Head of Public Sector Debt, Barclays

Organisations such as AIIB have the potential to change the world, and partnerships like this one help empower them to make life better for millions of people today and for generations to come.

 

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