The Asian Development Bank (ADB) has issued a US$3.5bn dual tranche bond. The issuance is comprised of a 2 year US$2.5bn note and US$1bn worth of 10 year paper.
The 2 year tranche had a coupon of 0.875%, and will yield 20bp over similarly dated US Treasuries, which currently yield 0.875%. The 10 year note carried a coupon of 2%, and will yield 27.95bp over US Treasuries maturing the same year, which are currently yielding 1.625%.
The 2 year paper gathered a wide investor base, with 31% of funding originating from Asia, 27% from the Americas and 42% from Europe, the Middle East and Africa. 15% of the 2 year notes went to fund managers and other investors, another 15% to banks and 70% went to central banks and official institutions.
“We are able to gather a wide investor base because of our high AAA rating,” said Debra Kertzman, Representative for the European Representative Office of the ADB.
Regarding the 10 year bonds, 23% of funding originated from the Americas, 48% came from Europe, the Middle East and Africa and 29% of the notes were placed in Asia. Fund managers and other investors received 35% of the bonds, 33% went to banks and official institutions and central banks took 32%.
The proceeds of the debt sale will form part of the bank’s ordinary capital resources and will be used in non-concessional operations.
The bank plans to raise roughly US$20bn from the international capital markets this year. Alongside raising additional capital, the ADB has also improved its operational efficiency.
“The bank’s concessional loan portfolio has been incorporated into its ordinary capital resources, which has given the ADB more headroom and allowed for increased risk taking capacity,” stated Kertzman.
The lead managers on the transaction were BNP Paribas, Bank of America Merrill Lynch, Goldman Sachs and Mizuho. A syndicate group was also established, consisting of HSBC, TD Securities, SMBC Nikko, RBC Capital Markets, BMO Capital Markets, Daiwa Securities, Deutsche Bank, Standard Chartered, Citigroup and Nomura.
