"The World and Japan" Database (Project Leader: TANAKA Akihiko)
Database of Japanese Politics and International Relations
National Graduate Institute for Policy Studies (GRIPS); Institute for Advanced Studies on Asia (IASA), The University of Tokyo

[Title] SOVEREIGN-BACKED LOAN AND GUARANTEE PRICING

[Place]
[Date] January 2016
[Source] Asian Infrastructure Investment Bank
[Notes]
[Full text]

SOVEREIGN-BACKED LOAN AND GUARANTEE PRICING

January 2016

1. Sovereign-Backed Loan Pricing

The Bank will initially charge a fixed spread to LIBOR (Lending Spread).
A. The fees and spread applicable to sovereign-backed loans are set out in Table 1:

Table 1. Fees and Lending Spread applicable to Sovereign-backed Loans

Fee/SpreadRate Charged onOne-time/recurring
Front-end Fee0.25%Loan principalOne-time
Commitment Fee0.25%Undisbursed loan banlancesRecurring
Lending Spread*1*0.75% to 1.40% Disbursed and outstanding loan balances Recurring

B. The Lending Spread consists of four components: the contractual lending spread, the maturity premium, the risk premium and the projected funding spread to LIBOR. The individual components of the Lending Spread as well as the overall Lending Spread applicable to different maturity categories are set out in Table 2:

Table 2. Lending Spread Components and overall Lending Spread

0.50%

Lending Spread 0.75% 0.90% 1.00% 1.15% 1.15% 1.30% 1.40%

Average MaturityUp to 8 yearsGreater than 8 through 10 yearsGreater than 10 through 12 yearsGreater than 12 through 15 yearsGreater than 15 through 18 yearsGreater than 18 through 20 years
Contractual Lending Spread0.50%0.50%0.50%0.50%0.50%
Maturity Premium0%0.10%0.20%0.30%0.40%0.50%
Risk Premium0.10%0.10%0.10%0.10%0.15%0.15%
Projected FundingSpread to LIBOR0.15%0.20%0.20%0.25%0.25%0.25%

2. Sovereign-Backed Guarantee Pricing

The fees and charge for sovereign-backed guarantees are set out in Table 3:

Table 3. Fees and Charges Applicable to Sovereign-backed Guarantees

RateCharged onOne-time/recurring
Front-end Fee0.25%Guarantee amountOne-time
Processing ChanrgeUp to 0.05% Guarantee amountOne-time
Standby Fee0.25% Undisbursed amount of financing benefiting from AIIB guaranteeRecurring
Guarantee Fee0.50%+Maturity PremiumFinancial Exposure under the guarantee(present value of the guaranteed payments at earliest call dates)Recurring

The Guarantee Fee includes an annual maturity premium as set out in Table 4:

Table 4. Maturity Premium for Sovereign-backed Guarantees

Average Maturityup to 8 yearsGreater than 8 through 10 yearsGreater than 10 through 12 yearsGreater than 12 through 15 yearsGreater than 15 through 18 yearsGreater than 18 through 20 years
Maturity Premium0% 0.10%0.20%0.30%0.40% 0.50%

{*1*The Lending Spread varies depending upon maturity, as set out in Table 2 below.}