The Asian Infrastructure Investment Bank (AIIB) raised 2.5 Billion (USD) from 90 bidders in 27 countries on a bond issue this week at the London Stock Exchange (LSE).  As Global Capital described it: “The AIIB placed itself among the very top supranational names in the capital markets…when its highly anticipated debut bond was priced in line with the likes of the World Bank and the European Investment Bank.”

Funds raised in London to help facilitate development in Asia

In celebration of the listing, Jin Liqun, President of AIIB, opened the LSE this week along with UK Chancellor Philip Hammond and LSE Chair Don Robert, as the South China Morning Post reported.

In a news release about the bond issue, the AIIB detailed that President Liqun said “the funds will be used to ‘drive AIIB’s priorities of investing in sustainable infrastructure, developing cross-border connectivity, and promoting environmental, social and governance investing in emerging Asia.’ Liqun said London’s “established international capital market…made a lot of sense” for AIIB’s first bond sale and was “the right place for us to have our listing.”

Notably, Funds raised by AIIB on the LSE are in addition to the British Government’s 2015 commitment of 50 million USD to AIIB.  And last month, Chancellor Hammond spoke in Beijing and renewed the UK’s commitment to support China’s Belt and Road Initiative, of which the AIIB is an integral partner.  Hammond also noted the importance of the UK’s legal services sector to supporting this development.

AIIB now has 97 nation-state members

The AIIB now has 97 nation-state members, among them are numerous other European nations, including  Austria, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Romania, Spain, Sweden, and Switzerland.

Professor Kerry Brown, Associate Fellow, Asia-Pacific Programme, Chatham House, praised the UK’s support for AIIB in 2015, saying it reflected Britain’s “leadership” and “strategic clarity” toward China.  Despite strong support from many in the US foreign policy community for joining AIIB, the US has yet to do so. And Japan’s Nikkei-Asian Review has called for both Japan and the US to join.  Japan, like America, has yet to do so.

AIIB listing seen as a “vote of confidence” in London as an international financial center

Speaking as he opened trading in a ceremony to commemorate the AIIB’s listing at the LSE, the former chief secretary to the Treasury Sir Danny Alexander (now Beijing-based and an AIIB co-chair) said, as the Evening Standard reported: “This is a vote of confidence that London is the [international] centre for bond issuance.”  The report detailed how “Britain was the first major developed country to back the AIIB when it set up in 2016. [And that] Alexander was instrumental in that decision while he was in the Cabinet.

Harry Robertson, reporting for City AM, also detailed how the bond issuance was a vote of confidence in the London Stock Exchange and the UK. Robertson reported that “some have raised concerns that the LSE would become a less attractive place for investors to raise money following Brexit.  And the Evening Standard noted with specificity that “in the wake of Brexit…there have been concerns multilateral organisations would seek to raise funds on other markets.”

Chancellor Hammond called the bond issuance “further evidence of the City’s enduring place as the centre for international capital”. And Don Robert, chairman of the LSE, said: “London is a leading centre of finance for sovereign and supranational issuers looking to access international capital markets to finance sustainable infrastructure projects and we’re delighted to be host to AIIB…”

Posted by John Grimley

John Grimley edits and publishes Asia Law Portal. A writer, editor & consultant to international businesses and organizations, he's the author of: A Comprehensive Guide to the Asia-Pacific Legal Markets (Ark Group, 2014).

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