ADB raises $5B on 5-yr bonds, to boost OCR

THE Asian Development Bank (ADB) returned to the US dollar bond market to continue its efforts to boost its ordinary capital resources (OCR).

In a statement, ADB said it raised $5 billion on five-year global bonds with a coupon rate of 1 percent per annum payable semi-annually and a maturity date of 14 April 2026.

The debt papers were priced at 99.942 percent to yield 15.25 basis points over the 0.75 percent US Treasury notes due March 2026.

“With investor interest in excess of $14 billion, this represents ADB’S largest orderbook for a global benchmark bond to date and is a hugely impressive outcome for ADB and the regional members it supports in Asia and the Pacific,” said ADB Treasurer Pierre Van Peteghem.

The transaction was lead-managed by BMO capital Markets, credit Agricole CIB, Deutsche Bank and Goldman Sachs International.

The issue achieved wide primary market distribution, with 33 percent of the bonds placed in Asia; 48 percent in Europe; Middle East, and Africa; and, 19 percent in the Americas.

By investor type, 53 percent of the bonds went to central banks and official institutions, 21 percent to banks, and 26 percent to fund managers and other types of investors.

“A coming together of factors contributed to the record $5 billion final print in the post-easter issuance window, including attractive swap spreads and pick-up versus US Treasuries and relatively low issuance supply in March,” Van Peteghem said.

“We continue to be delighted with the consistent and deep support provided by investors across sectors which helped underpin the momentum for this trade,” he added.

The ADB plans to raise around $34 billion to $36 billion from the capital markets in 2021.

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 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’ ADB loans are obtained from OCR. The ADF, which was established in 1973, are extended to poorer countries at lower interest rates and longer maturities.