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The Asian Development Bank (ADB) returned to the US dollar bond market with the pricing of a dual-tranche $3.75 billion 3-year and a $1.5 billion 10-year global benchmark bond issue, proceeds of which will be part of ADB's ordinary capital resources.
ADB marked a strong start to the New Year with this pair of global dollar benchmarks in our core market topping off a fortnight of benchmark issuance across other non-core currencies including Australian dollar, New Zealand dollar, and pound sterling, said ADB Treasurer Pierre Van Peteghem. Not only were we able to print ADB's largest trades in a single outing, but the combined orderbook represented the largest-ever level of subscription we have seen to date.
The dual 3-year and 10-year tranche approach allowed ADB to differentiate itself from the crowded supply of 5-year issuances and to respond to investor demand on both ends of the maturity spectrum. The robust reception enabled ADB to upsize and tighten the price guidance for both transactions, Van Peteghem added.
The 3-year bond, with a coupon rate of 2.25% per annum payable semi-annually and a maturity date of 20 January 2021, was priced at 2.287% to yield 19.20 basis points over the 2% US Treasury notes due January 2021. The 10-year bond, with a coupon rate of 2.75% per annum payable semi-annually and a maturity date of 19 January 2028, was priced at 2.783% to yield 21.85 basis points over the 2.25% US Treasury notes due November 2027.
The transaction was lead-managed by Goldman Sachs, J.
Both issues achieved wide primary market distribution with 47% of the 3-year bonds placed in Europe, Middle East, and Africa, 31% in the Americas, and 22% in Asia. By investor type, 78% of the bonds went to central banks and official institutions, 12% to fund managers and other types of investors, and 10% to banks. For the 10-year bonds, 46% were placed in Europe, Middle East and Africa, 34% in Asia, and 20% in the Americas. By investor type, 45% of the bonds went to central banks and official institutions, 38% to banks, 17% to fund managers and other types of investors.
ADB plans to raise around $25-28 billion from the capital markets in 2018.
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