AIIB Receives “Zero-Risk” Rating from Basel Committee, Equal Status to Asia Development Bank

The Basel Committee on Banking Supervision (BCBS), a body that serves as an influential arbiter of best standards to be used by financial regulators worldwide, agreed that bank supervisors may allow a zero-risk rating for future bond offerings from the Asian Infrastructure Investment Bank (AIIB).  AIIB is expected to come to market with its first bond offering in the coming months.

This is a key milestone for the China-led financial institution in its pursuit of equal status with the other “supranational” banks it was created to rival, such as the Asia Development Bank and World Bank.  This decision by the BCBS adds authenticity to this claim.  Just as importantly, it also clears the way for favorable pricing on debt raised to support its loan portfolio and overall agenda.

According to an article in The Asset,

AIIB hopes to become a core holding for high grade bond portfolios, and achieve tight pricing on large benchmark offerings similar to the Asian Development Bank.”

This latest development also adds support to the Triple A ratings already assigned to the bank from Moody’s, Fitch and S&P.  Although AIIB’s actual loan activity has been modest to date, the bank has positioned itself for significant growth with the recruitment of leading economies from around the world as founding members and market support for likely large-scale fundraising.