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ADB raises $4.25 billion from US dollar bond market to boost OCR for 2020
People are seen going inside the ADB building in Ortigas, report said The Asian Development Bank expects to lend an estimated $7.8 billion, or nearly $2 billion annually, from 2018 to 2021, under a new six-year country partnership strategy.It would be the highest for any 4-year period, the Manila-based multilateral lender said Thursday.“The annual average also doubles the current estimated yearly lending pipeline,” the bank said in a statement.Photo by:Nonie Reyes

ADB raises $4.25 billion from US dollar bond market to boost OCR for 2020

The Asian Development Bank (ADB) raised a total of $4.25 billion from the US dollar bond market on Wednesday.

The Manila-based multilateral development bank returned to the capital markets with a $2.25 billion worth three-year bond issuance and a $2 billion worth 10-year bond issuance.

The amount raised is part of ADB’s efforts to raise $25 billion from the capital markets to boost its ordinary capital resources (OCR) this year.

“The dual three-year and 10-year tranche approach allowed ADB to respond to investor demand on both ends of the maturity spectrum as reflected in the final order book being over $6.5 billion,” ADB Treasurer Pierre van Peteghem said.

“It is also noteworthy that this 10-year transaction opened the market for supranationals in that tenor and equaled ADB’s largest 10-year transaction to date,” Van Peteghem added. A supranational is defined as having power or influence that transcends national boundaries or governments.

The ADB said the three-year bond had a coupon rate of 1.625 percent per annum payable semiannually and a maturity date of January 24, 2023. It was priced at 99.953 percent to yield 7.7 basis points over the 1.5 percent US Treasury notes due January 2023.

The 10-year bond, with a coupon rate of 1.875 percent per annum payable semi-annually and a maturity date of January 24, 2030, was priced at 99.61 percent to yield 13.25 basis points over the 1.75 percent US Treasury notes due November 2029.

The transaction was lead-managed by Barclays, JPMorgan, Nomura and RBC Capital Markets. A syndicate group was also formed consisting of ANZ, Commerzbank, ING, Credit Agricole and Natwest Markets.

“The dollar market has seen a very active start to the new year,” Van Peteghem said. “[The] ADB is very pleased to make its first outing a strong one.”

The ADB said both issues achieved wide primary market distribution with 37 percent of the three-year bonds placed in Asia; 37 percent in the Americas; and, 26 percent in Europe, Middle East and Africa.

By investor type, 51 percent of the bonds went to central banks and official institutions; 35 percent to banks; and, 14 percent to fund managers and other types of investors.

For the 10-year bonds, 55 percent were placed in Europe, Middle East, and Africa; 31 percent in Asia; and, 14 percent in the Americas.

By investor type, 36 percent of the bonds went to central banks and official institutions; 44 percent to banks; and, 20 percent to fund managers and other types of investors.

The OCR is one of two main lending operations of the ADB, the other one being the the Asian Development Fund. The OCR is offered at near-market terms to middle-income countries and low-income countries, while the ADF is the ADB’s concessional window. The ADB has retained the ADF as a grant-only operation.