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Belt and Road

AIIB's $2.5bn bond market debut draws high demand

China-led development bank to spend funds on transport, water and clean energy

The AIIB, based in Beijing, wants to raise money for infrastructure projects from global investors.   © Reuters

LONDON -- The China-led Asian Infrastructure Investment Bank is looking to cement its presence in the global capital market after pricing its first foreign currency-denominated bonds on Thursday.

The development bank's $2.5 billion worth of five-year dollar bonds will have a coupon rate of 2.25% per annum. The bonds, which closed on Thursday afternoon London time, attracted over $4.4 billion in orders from 27 countries -- nearly twice the estimated figures.

An investor breakdown shows 67% are central banks and official institutions, followed by banks at 25% and fund managers at 5%. The bonds will be listed on the London Stock Exchange.

"By participating in capital markets, we can harness further financial support from a global investor base," AIIB President Jin Liqun said in a statement.

The AIIB intends to spend the money it raises on transport, water and clean-energy projects in Asia.

The bank in 2017 obtained the highest AAA rating from three U.S. and British credit rating agencies, including S&P Global Ratings. The coupon rate of 2.25% is comparable to that on five-year U.S. Treasurys, an endorsement from global investors.

The AIIB was established in January 2016 with 57 member countries, including the U.K. and Germany. It now has nearly 100 members, but the U.S. and Japan continue to hold out.

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