ADB raising $3 B from bond issue

The Asian Development Bank (ADB) is raising $3 billion from the dollar bond market for its nonconcessional lending operations.

The Manila-based multilateral bank announced that it has returned to the dollar bond market with the pricing of the five-year global benchmark bond issue, proceeds of which will be part of its ordinary capital resources (OCT).

Funding sources for OCR include paid-in capital, retained earnings (reserves), and proceeds from debt issuance.

Thus, to finance its OCR lending operations, ADB issues debt securities in the international and domestic capital markets.

The Philippines is among ADB developing member countries with access to OCR funding.

“Market conditions have been volatile these past few months with rates marching steadily downward and swap spreads nearing their historical lows,” ADB Treasurer Pierre Van Peteghem said.

“Following the pop-up in swap spreads, we saw a window to bring ADB’s last global benchmark of 2019 in the five-year part of the curve adding to the existing three-year, five-year, and 10-year lines issued earlier on. The engagement from our investor base was typically strong and we are proud to be able to end the year on a high note.”

The five-year bond, has a coupon rate of 1.500 percent per annum payable semi-annually and a maturity date of Oct. 18, 2024.

The transaction was lead-managed by Bank of America Merrill Lynch, Citi, Daiwa Capital Markets Europe Limited, and HSBC Bank plc.

A syndicate group was also formed consisting of Commerzbank, Danske Bank, DNB Bank, Nordea Bank, and Wells Fargo Securities.

With around 65 investors taking part, the issue achieved wide primary market distribution with 34 percent of the bonds placed in Asia; 42 percent in Europe, Middle East, and Africa; and 24 percent in the Americas.

By investor type, 58 percent of the bonds went to central banks and official institutions, 32 percent to banks, and 10 percent to fund managers and other types of investors.

ADB plans to raise around $24 billion from the capital markets in 2019.