THE Asian Development Bank (ADB) has raised another $5.5 billion from the United States dollar bond market to boost its ordinary capital resources this year.
The Manila-based multilateral development bank raised $4 billion from a 3-year global benchmark bond and another $1.5 billion from a 7-year global benchmark bond.
ADB plans to raise $34 billion-$36 billion from the capital markets in 2021. In April, the ADB tapped the US bond market to raise $5 billion on five-year global bonds.
“We are delighted with the strong support from our investors across regions in our dual tranche 3- and 7-year outing,” ADB Treasurer Pierre Van Peteghem said.
“With an order book of over $12 billion, we raised over $5 billion across the two maturities. Once again, this provides us with additional resources to assist our developing member countries in Asia and the Pacific,” he added.
The 3-year bond, with a coupon rate of 0.375 percent per annum payable semi-annually and a maturity date of 11 June 2024, was priced at 99.94 percent to yield 9.75 basis points over the 0.25 percent United States (US) Treasury notes due May 2024.
The 7-year bond, with a coupon rate of 1.25 percent per annum payable semi-annually and a maturity date of 9 June 2028, was priced at 99.414 percent to yield 8.8 basis points over the 1.25 percent US Treasury notes due May 2028.
The transaction was lead-managed by Barclays, Citi, JP Morgan, and TD Securities. A syndicate group was also formed consisting of CIBC, Daiwa, ING, and Scotiabank.
Both tranches achieved wide primary market distribution. On the 3-year issue, 22 percent of the bonds were placed in Asia; 35 percent in Europe, Middle East, and Africa; and 43 percent in the Americas.
By investor type, 51 percent of the bonds went to central banks and official institutions, 32 percent to banks, and 17 percent to fund managers and other types of investors.
On the 7-year issue, 42 percent of the bonds were placed in Asia; 42 percent in Europe, Middle East, and Africa; and 16 percent in the Americas.
By investor type, 67 percent of the bonds went to central banks and official institutions, 18 percent to banks, and 15 percent to fund managers and other types of investors.
In 2015, 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 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’s 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.