"Business New Europe" - EDB on course to fulfil its goals
The Eurasian Development Bank (EDB) is on track to meet its investment goals after raising a key Eurobond in September at record low interest rates.
The bank also issued its debut rubledenominated Eurobond two
weeks later on September 28, raising RUB5bn
The highly successful international
«We were very pleased with our bond issues, as they underline the confidence investors take in the strength of the bank and the long-term value that EDB investments add to our member countries,» says Igor Finogenov, Chairman of the Management Board of EDB. «The yields we received are lower than most of the biggest Russian state-owned blue-chip banks, but the most important thing for us is the tenors of the bonds that match the long-term perspective of our projects.»
The EDB is a regional development bank with a specific focus on integration projects, including promotion of mutual trade and mutual investments between the member countries. The Bank was established by Russia and Kazakhstan in 2006, since when Armenia, Belarus, Tajikistan and Kyrgyz Republic have joined. The Bank’s investment portfolio includes the integration projects that enjoy the benefits of the Customs Union of Belarus, Kazakhstan and Russia, which came into effect in 2011.
The bank is also the administrator of the Anti-Crisis Fund of the Eurasian Economic Community (EurAsEC), which was set up to help member governments that were struggling with the international financial crisis.
The recent bond issues help to build out the bank’s yield curve and play an integral part in meeting the bank’s goal to provide affordable long-term financing for projects that would otherwise struggle to find funding over such long periods. The bank may come back to the capital markets next year, while it’s 2012 funding programme has been fulfilled. «We’ve met the targets, and will be tapping the market no earlier than 2013. We don’t want to borrow funds that we won’t be able to employ on the spot. However, we have several large projects that will take a long time to develop and we are constantly renewing our portfolio,» says Finogenov.
A typical project is the deal signed with the EN+ Group and the EDB during the St Petersburg Forum this summer to develop the power industry in Russia and Kazakhstan. The EDB has agreed to finance the group’s plans, which include an extra-high-voltage power bridge between Siberia and Central Russia that will also be able to connect to the power system of Northern Kazakhstan.
«The EBD member states have their attention focused on building interregional and cross-border power bridges,» notes Finogenov. «I have no doubt that our cooperation with En+ Group, one of Russia’s power industry and infrastructure leaders, will help implement this kind of long-term investment project that will deepen economic integration in the region.»
The power bridge is one of the EDB’s mega-projects, but the EDB also invests into smaller companies that will benefit from the creation of the Common Economic Space (CES), which could generate up to $1 trillion of added value for the participating states, says Finogenov. «The total cumulative effect from the creation of the CES and Ukraine’s possible subsequent participation can reach $1 trillion for the four countries before 2030,» says Finogenov. «Working together will benefit each country and produce an additional growth in Belarusian GDP of 14%, Ukrainian 6%, Kazakh 3.5%, and Russian the least with 2%. Belarus, Ukraine and Kazakhstan are expected to benefit from this integration the most in terms of rising per capita, while Russia will benefit the most in absolute terms. Everyone wins.»