ADB raises $2B in US bond market for Covid assistance
THE Asian Development Bank (ADB) returned to the US bond market for the second time this year to help boost its resources to address the region’s pandemic-related needs.
In a statement, the Manilabased multilateral development bank said it raised $2 billion from the issuances of 10-year global bonds.
This will help support the ADB’S plans to raise around $30 billion to $35 billion from the capital markets in 2021. The proceeds will boost the bank’s ordinary capital resources (OCR).
“We appreciate the strong support of our investors for this new 10-year global bond issue,” said ADB Treasurer Pierre Van Peteghem. “This is our second successful outing in the US dollar market this year. The constructive result provides us with more resources to support our developing members in Asia and the Pacific, especially those most affected by the pandemic.”
The 10-year bond has a coupon rate of 1.5 percent per annum payable semi-annually and a maturity date of 4 March 2031.
It was priced at 99.088 percent to yield 18.35 basis points over the 1.125-percent US Treasury notes due February 2031.
The transaction was leadmanaged by Jpmorgan, Nomura, RBC and TD Securities. A syndicate group was also formed consisting of ANZ, Credit Agricole CIB, ING, Natixis and Scotiabank.
The issue achieved wide primary market distribution with 27 percent of the bonds placed in Asia; 48 percent in Europe, the Middle East and Africa; and 25 percent in the Americas.
By investor type, 56 percent of the bonds went to central banks and official institutions, 30 percent to banks, and 14 percent to fund managers and other types of investors.
In 2015, the ADB announced it was significantly scaling up its capacity to provide more financing through a merger of its concessional Asian Development Fund (ADF) loan portfolio with its OCR balance sheet.
The merger will boost the ADB’S total annual lending and grant approvals to as high as $20 billion—50 percent more than the current level. ADB assistance to poor countries will rise by up to 70 percent.
The Manila-based multilateral development bank (MDB) extends two kinds of lending, the OCR for middle-income countries at market rates and the ADF for poor countries at concessional rates.
The Philippines’s ADB loans are obtained from OCR. The ADF, which was established in 1973, is extended to poorer countries at lower interest rates and longer maturities.