ADB returns to China’s bond exchange, raises $307M
THE Asian Development Bank (ADB) has secured its largest borrowing in a local Asian currency after raising roughly $307 million in Panda bonds from the Chinese credit market.
The ADB on Wednesday returned to China’s onshore bond exchange after 11 years of missing action in the field. The Manila-based multilateral agency priced 2 billion in Chinese yuan—about $307 million—of Panda bonds that pays 3.20 percent and matures in five years until 2026.
It was priced 21 basis points (bps) below the corresponding China Development Bank bondreference yield, and 9 bps above the Chinese government bonds. The securities form the first borrowing in the 10 billion yuan program approved last year by the National Association of Financial Market Institutional Investors.
The ADB also disclosed it was 1.86 times oversubscribed. The agency added the Panda bonds was distributed to a network of domestic and international investors through a centralized book building and auction in the China Inter-bank Bond Market by way of investor roadshows, as well as one-on-one meetings.
The bond issue was arranged by lead underwriter and bookrunner Bank of China, along with BNP Paribas SA, CITIC Securities Co. Ltd., HSBC Bank Plc. and a group of related banks.
According to the ADB, proceeds of the bond will be used to boost the agency’s ordinary capital resources and deployed to support its operations in the Chinese renminbi market. Further, part of the proceeds will be allocated to fund assistance on social services and infrastructure projects in member-economies, the ADB said.
ADB Treasurer Pierre Van Peteghem was quoted in a statement as saying that the multilateral agency has worked its way into landing back to the Chinese bond market, as the lender beefs up its ordinary capital resources to fund Covid-response programs.
“[The] ADB has worked hard on [its] return to the Chinese domestic bond market, and is delighted with this outstanding result,” Peteghem said. “The availability of competitively priced local currency liquidity is critical to supporting ADB’S development projects in the People’s Republic of China as announced in the 5-year country partnership strategy.”
The last time the ADB issued Panda bonds was in 2009, when it came out with a 1-billion yuan, 10-year issue, to follow through its first in 2005 with the same value.
The lender also returned to the United States bond market last month with a $2-billion, 10year issue. The ADB said it plans to raise as much as $35 billion from the capital markets this year to add to its ordinary capital resources allocated for members dealing with the Covid-19 pandemic.