Bank plans inaugural bond issue next year, says Vice-President Danny Alexander
“India is the first country where the Bank has committed more than $1 billion of financing,” said Danny Alexander, Vice-President and Corporate Secretary of the Asian Infrastructure Investment Bank, adding that it is also interested in the NIIF and Mumbai Metro Project. In an interview to BusinessLine, Alexander also dismissed perceptions of competition between multilateral agencies and said that “cooperation” is the watchword for AIIB. “We are co-financing many projects with the World Bank and the Asian Development Bank (ADB),” he said. Excerpts:
In India, what are the sectors that AIIB is interested in financing?
The third annual meeting of the Board of Governors of AIIB will be held in Mumbai in June next year. We are keen to use it as an opportunity to engage with the Indian financial community. The bank is looking to mobilise more private investments in infrastructure finance across Asia. India has been working on it and has various initiatives such as the National Investment and Infrastructure Fund (NIIF). The AIIB might also invest in it.
India is the largest borrower of the AIIB. We have just announced that we will finance Part 6 of the Bangalore Metro project. India is the first country where we have committed to more than $1 billion of financing. We are also looking at the Mumbai metro project, which we will look at next year.
AIIB started working in January 2016 and India is the largest borrower. The main areas are energy, transportation and also funds in India that work on broader infrastructure projects, as well as urban infrastructure and smart cities. The three main priorities of the Bank is mobilising private investment for infrastructure, sustainable infrastructure and cross-country connectivity to improve the links between countries in the region.
What are the AIIB’s plans for 2018?
In 2018, we will have our inaugural bond issuance and start establishing our presence in the financial markets. This year, we received AAA credit rating from three major international rating agencies. The capital of the bank is denominated in US dollars and the bond issuance will also be in the same currency. But as the next step, we want to develop the ability to finance in local currencies. That will probably be in 2019.
What about increasing the membership and annual lending target?
We are a growing bank. We lent $1.7 billion in 2016, which increased to $2.5 billion in 2017. This will increase further next year. In terms of membership, we started with 57 founding members in 2016. During this year, our Board of Governors has approved applications from 23 countries and our total membership is now 80. By the time of our annual meeting in Mumbai, our membership should be closer to 90.
Will the AIIB expand lending operations to other regions?
Asia will always be the most important focus, as the name of the bank reflects. Our Articles of Agreement give us the ability to finance projects in other member countries. We are discussing this internally. We have already financed one project outside Asia in Egypt for solar power. The test we have to apply in such projects is how it will bring economic benefit to Asia.
There are perceptions that AIIB is dominated by China?
That is not correct. The idea of AIIB was put forward by the Chinese government and we are headquartered in Beijing but we are a multi-lateral bank. We take our instructions from all of our member countries.
Will the AIIB invest in North-East India where there is political tension with China?
Our investment is about the project. We do not take any political considerations into account. If there are good infrastructure projects that meet our tests and satisfy our policies and fit in our strategy, then we will put the project for approval to our Board.
The AIIB also has a policy on international relations. For example, if a project is on a disputed waterway, then all parties to the dispute are involved in the decision making. But, I don’t think we have yet considered any projects in the region. It is up to the Indian government to bring us these projects.