The Asian Development Bank (ADB) announced on October 11 its return to the US dollar bond market with the pricing of a five-year global bond amounting to US$3 billion, the proceeds of which will be part of ADB’s ordinary capital resources.
In tapping the market, ADB treasurer Pierre Van Peteghem notes the market conditions have been volatile during these past few months with rates marching steadily downward and swap spreads nearing their historical lows.
“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,” says Van Peteghem.
The bond offering was priced at 99.722% with a coupon rate of 1.50% per annum payable semi-annually to yield 11.4bp over the US treasury. With around 65 investors taking part, the issue achieved wide primary market distribution with 34% of the bonds placed in Asia; 42% in Europe, Middle East and Africa; and 24% in the Americas. By type of investors, 58% of the bonds went to central banks and official institutions, 32% to banks, and 10% to fund managers and other investors.
The transaction was lead-managed by Bank of America Merrill Lynch, Citi, Daiwa Capital Markets Europe, and HSBC. A syndicate group was also formed consisting of Commerzbank, Danske Bank, DNB Bank, Nordea Bank, and Wells Fargo Securities.
ADB plans to raise around US$24 billion from the capital markets in 2019. It previously accessed the US dollar bond market in July this year as it printed a US$3.25 billion issue for three years. That offering, which attracted the participation of more than 75 investors, was priced at 99.898% with a coupon of 1.875% to yield 7.75bp over the US treasury.