Bhutan issues first sovereign bond to meet fiscal financing needs in COVID-19 recovery

The government of Bhutan has announced its first sovereign bond to support the economy in recovery from the COVID-19 pandemic while diversifying financial sources. The new financing instrument is supported by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).  

According to a press release by UN ESCAP, the Royal Government of Bhutan has recently completed the offering of a 3-year bond Series RGOB001 of Nu. 3,000 million (or US$ 41 million) at an annual coupon rate of 6.5 per cent to support financing fiscal needs in responding to COVID-19 pandemic. The transaction was well-received and resulted in oversubscription of more than 100 per cent. The issuance was mainly dominated by financial institutions, while non-bank institutions such as pension and insurance companies as well as civil society organization also participated. The allotment will be based on a pro-rata basis. 

“Policymakers are tackling difficult choices over how to prioritize development spending, while continuing to expand their squeezed fiscal space. Exploring sustainability-oriented bonds and innovative financing instruments options for SDG investment should be explored further. Now is the time to capitalize on a proven idea to support a sustainable and resilient recovery from COVID-19,” said United Nations Under-Secretary-General and Executive Secretary of ESCAP Armida Salsiah Alisjahbana. 

Gerald Daly, United Nations Resident Coordinator in Bhutan said, “I congratulate Bhutan on the issuance of its first-ever sovereign bond and ESCAP on providing successful technical support to assist the Royal Government in this important work. With this bond, Bhutan has helped demonstrate how a capital market can be created in a small economy. The UN system stands ready to further support Bhutan in its efforts to mobilize financial resources and build resilience during the Covid-19 pandemic and beyond.  

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