The Asian Development Bank (ADB) sold its first bond in Uzbekistan’s local currency and issued another one in Mongolia as part of a push to help countries avoid risky foreign debt, released by the organization. The Uzbekistan deal in June raised $24.7 million to help women start businesses outside the capital. Mongolia’s July bond brought in $8.4 million for expanding a hospital.
Borrowing in foreign currencies can backfire badly for developing countries. When their local money loses value against the dollar, debt payments skyrocket and governments face budget crises. ADB’s program lets countries borrow in their own currencies instead, which is much safer for them.
The Uzbekistan bond paid 14.5% interest over three years and marked ADB’s first deal in that currency. Mongolia’s bond offered 10.30% for three years, with European investors buying the whole thing through Standard Chartered Bank.
“These bond issues help borrowers most vulnerable to foreign currency risks in frontier markets,” said ADB Treasurer Tobias Hoschka when announcing the deals.
Both bonds target specific development needs beyond just currency protection. Uzbekistan’s money goes to women entrepreneurs in rural areas where getting loans is tough. Mongolia will use its funds to build more hospital space, tackling healthcare shortages in the country.
ADB keeps growing this local currency program as more countries want safer ways to finance development projects. This approach shields vulnerable economies from currency swings while putting money into crucial areas like women’s economic empowerment and health systems. It’s becoming a key tool for smarter development finance.
