ADB revises charges on sovereign loans

The Asian Development Bank (ADB) has revised its loan charges on new LIBOR-based loans and local currency loans to sovereign borrowers or borrowers with sovereign guarantees negotiated, on, or after, July 1, 2010, ADB announced Monday.

Under the new loan pricing structure, the effective contractual spread will be adjusted to 0.4 percent per annum from the current charge of 0.2 percent.

The adjustment will be phased in over 2010 and 2011, with the new sovereign loans negotiated from 1 July 2010 to 30 June 2011 carrying an effective contractual spread of 0.3 percent per annum, and those negotiated, on, or after, 1 July 2011 carrying an effective contractual spread of 0.4 percent per annum, Manila- headquartered ADB said.

The sovereign loans will continue to carry a commitment charge of 0.15 percent, and charges for loans negotiated before July 1, 2010 will not be affected. The exact level of ADB's lending rate can vary because it is determined by the cost of borrowings and the reference floating rate, such as LIBOR.

"The revision reflects ADB's continuous commitment to safeguard ADB's financial strength based on sounding banking principles, while striving to provide resources for developmental lending at the lowest and most stable funding costs and on the most reasonable lending terms," said ADB Treasurer Mikio Kashiwagi.

Source:Xinhua