The Executives' Meeting of East Asia and Pacific Central Bank group (EMEAP) has completed the funding of the Asian Bond Fund 2 (ABF2) with a total amount of 2 billion US dollars, Malaysia Central Band said Thursday.

Of this amount, 1 billion US dollars was allocated to the Pan-Asia Bond Index Fund (PAIF) and the other 1 billion US dollars distributed to the eight single-market domestic currency funds, the central bank said in a statement released in Kuala Lumpur.

EMEAP comprises 11 central banks and monetary authorities in East Asia and Pacific region. ABF is an initiative by the EMEAP Group to broaden and deepen the domestic and regional bond markets in Asia.

The statement said that State Street Global Advisors Singapore Ltd had been appointed as the manager for PAIF, while Am Investment Management Sdn Bhd Malaysia the manager for the Malaysian domestic fund.

In June 2003, EMEAP launched the first stage of ABF (ABF1), which invested in US dollar denominated bonds issued by Asian sovereign and quasi-sovereign issuers in EMEAP economies, excluding Australia, Japan and New Zealand, it said.

Building on the success of ABF1, the group has extended the ABF concept to bonds denominated in local currencies and announced thelaunch of the second stage of ABF (ABF2) in December 2004, it said.

It said that ABF2 was a historic milestone in regional cooperation and an important catalyst to domestic and regional market development.

Citing the developmental impact of ABF2 as significant, the statement said, "it will raise investors' awareness and interest in Asian bonds by providing innovative, low-cost and efficient products in the form of passively managed bond funds or listed bond funds."

ABF2 would further broaden and deepen the domestic and regional bond markets, contributing to greater and more efficient financial intermediation, in addition to improvements in market infrastructure in the region, it added.

"We are confident that the ABF2 initiatives will also play a catalytic role, complementing our recent efforts in the development of the Malaysian bond market," the statement said.

Source: Xinhua