The government is preparing to approve Asian Development Bank (ADB) local currency bond.

The Cabinet is going to approve the ADB’s local currency bonds worth Rs 50 billion, said finance secretary Suman Sharma.

The ADB had submitted a proposal – on May 20 – to issue local currency bond to invest resources collected in various infrastructure projects like hydropower.

Earlier the government had last April allowed International Finance Corporation (IFC) – the private sector lending arm of the World Bank – to issue local currency bonds worth $500.

IFC and the ADB both had expressed interest to issue local currency bonds around four years ago to help Nepal generate resources for the much needed infrastructure funding.

The ADB proposal has already received green signal from ministerial-level, Sharma said, adding that the ministry will forward the proposal to the Cabinet in the next meeting.

The ADB has proposed to invest in eight hydropower projects including Upper Modi, Upper Modi A, Upper Trishuli I, Lower Solu, Lower Balephi, Kali Gandaki Govan, Tamakoshi III and Super Trishuli Hydro Electric Project within the next seven years, according to the ministry.

The local currency bonds will be sold to commercial banks and institutional investors like insurance companies and funds. But the interest rate would depend on market conditions including primarily on government treasury bills (TB) and transaction costs.

The government had issued Local Currency Bond Guideline in October 2013 allowing AAA-rated international financial institutions to issue rupee bonds to invest on developing hydropower, agriculture, road and tourism infrastructures.

Related News