Maldives lists US$100m bond on Abu Dhabi exchange

The Maldives listed a US$100 million sovereign bond on the Abu Dhabi Securities Exchange (ADX) last Thursday in a private placement by the Abu Dhabi Fund for Development.

The dollar-denominated bond, which has a five-year maturity with a 5.5 percent yield, reportedly became the first sovereign bond listed on ADX.

The listing comes amid concern over mounting national debt due to an ambitious infrastructure scale-up, primarily financed through Chinese lending.

In May last year, the Maldives raised US$200 million from its debut sovereign bond listing on the Singapore Stock Exchange.

It was rated B2 by Moody’s and B+ by Fitch Rating, representing a stable outlook based on tourism-driven growth, low institutional strength, and a high debt burden.

The bond was among the Best Deals in South Asia in 2017 during January’s Triple A Country Awards by The Asset magazine in Hong Kong.

It was issued at a coupon rate of seven percent per annum with Hong Kong-based BoCom International Holdings Co Ltd as the global coordinator for the sale.

Global Capital Asia suggested that the appointment of BoCom International was “a sign of China’s backing, and in line with its Belt and Road initiative.”

Opposition figures called the move “bad economics” as the finance minister defended the accumulation of debt to finance the flagship projects as “necessary investments” with longer-term payoffs.

The shadow economic committee of the Maldivian Democratic Party contended at the time that the bond was issued because US$100 million was owed to India’s central bank and US$75 million to the State Bank of India.

The US$100 million was secured in a currency swap deal to shore up foreign currency reserves, which was severely depleted after the central bank bought a US$140 million bond from the state-owned airport company to help compensate GMR.