On July 15, 2024, FMO, the Dutch entrepreneurial development bank, issued the first-ever Jordanian dinar-indexed[1] bond. This was done in collaboration with TCX, who provided JOD (Jordanian dinar) exposure to FMO through a swap transaction.
TheUSD 5 mln bond has a term of 36 months, and FMO issued this triple-A rated note with the support of Citi, as the arranging bank. Investors receive the benefits of diversification and attractive yield, reflective of a frontier market bond.
TCX’s involvement in the issuance enables private investors to invest in bonds denominated in frontier currencies, but with protection from convertibility and transfer risk. The combination of the triple-A credit rating from FMO, with the risk-return attributes of a frontier-currency denominated note, create an innovative and unique offer, for which there is strong and growing demand from global investors.
The bond issuance also allows FMO to use the proceeds to on-lend to projects aligned with FMO’s responsible finance and development objectives.
Fatou Bouare, Chief Finance and Operations Officer at FMO, said,“We are pleased to have issued the first-ever Jordanian dinar bond with the support of TCX and Citi, reflecting FMO’s strategy to create impact and to support the development of local capital markets. The proceeds will be used to fund the private sector in low- and middle-income countries to sustain inclusive and sustainable growth. We look forward to further supporting the development of the JOD denominated market with future issuances."
Othman Boukrami, Deputy CEO at TCX, said, “Capital market development and private sector mobilization are crucial to TCX, our shareholders, and the whole development finance community. The issuance of the first-ever offshore Jordanian dinar (JOD) synthetic note by FMO establishes greater market depth in the local fixed income curve. This milestone will facilitate greater private sector mobilization for future bond issuances. We are proud of the successful collaboration with FMO’s treasury on this initiative and look forward to supporting further synthetic local currency financing in Jordan.”
[1] Bonds that TCX hedges are indexed (or ‘synthetic’) since the cash flows are settled in dollars or euros but linked to the price movement of a frontier currency. The indexed nature ensures investors’ protection from convertibility and transfer risk, as the bonds are issued offshore.
