The Asian Development Bank (ADB) has raised AMD 2.66 billion (about USD 5.4 million) from a new issue of offshore Armenian dram-linked bonds.

According to ADB, the transaction was structured as a 5-year fixed rate bond maturing in April 2023.

The transaction represents ADB’s first fund raising in Armenian dram and marks another landmark in ADB’s strategy of delivering local currency funding in developing countries.

“Currency risk is always a challenge for borrowers in developing countries,” said ADB Treasurer Pierre Van Peteghem. “This inaugural bond issue in Armenian dram will allow ADB to offer local currency loans in Armenia, while attracting foreign investment and supporting the development of the Armenian capital markets.”

The bonds, which are denominated in Armenian dram but settled in U.S. dollars, were underwritten by HSBC Bank plc as sole lead manager. The new issue bears a semi-annual coupon of 7.2392%. The bonds were fully placed with investors in Europe.

Proceeds from the bonds will be mobilized to support ADB local currency lending in Armenia. In 2017, ADB committed USD 40 million in sovereign loans and USD 86 million in non-sovereign assistance in Armenia.