ASEAN+3 to provide credit enhancement facility for corporations
Aditya Suharmoko, The Jakarta Post, Jakarta | Mon, 04/20/2009 6:45 PM
ASEAN+3 countries will launch a credit enhancement facility to increase the rating of corporate bonds, giving leverage to private firms to tap more financing amid the liquidity crisis.
The facility, dubbed the Credit Guarantee Investment Mechanism (CGIM), will raise the rating of corporate bonds, thus "reducing borrowing costs of companies", Finance Ministry head of fiscal policy Anggito Abimanyu said Monday.
He added the CGIM would have an initial capital of US$500 million, managed by the Asian Development Bank (ADB).
More details on the implementation of the facility will be discussed at the ADB's upcoming 42nd annual meeting of board of governors in Bali next month.
The ADB said earlier that although Asian bond markets had shown considerable progress and growth over the past 10 years, they remained largely underdeveloped and much work still needed to be done.
The CGIM, the ADB said, would allow access to initial US dollar funding and lower the cost of fundraising by banks, thereby boosting foreign exchange liquidity in the region.
