MANILA, Philippines - The Asian Development Bank (ADB) has raised $3 billion through a 5-year global benchmark bond issue.
It is the first time in a while the bank has raised funds in U.S. dollars.The raising comes at a time when official U.S. interest rates are at a record low.
"Market conditions have been volatile these past few months with rates marching steadily downward and swap spreads nearing their historical lows," ADB Treasurer Pierre Van Peteghem said Friday. "Following the pop-up in swap spreads, we saw a window to bring ADB's last global benchmark of 2019 in the 5-year part of the curve adding to the existing 3-year, 5-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," he said.
The 5-year bond, with a coupon rate of 1.500% per annum payable semi-annually and a maturity date of 18 October 2024, was priced at 99.722% to yield 11.4 basis points at over the 1.500% US Treasury notes due September 2024. This equates to a rate of 1.61%.
The transaction was lead-managed by Bank of America Merrill Lynch, Citi, Daiwa Capital Markets Europe Limited, and HSBC Bank plc. A syndicate group was also formed consisting of Commerzbank, Danske Bank, DNB Bank, Nordea Bank, and Wells Fargo Securities.
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 investor type, 58% of the bonds went to central banks and official institutions, 32% to banks, and 10% to fund managers and other types of investors.
ADB says plans to raise around $24 billion from the capital markets in 2019.