ADB has returned to the US dollar global bond market with a US$1 billion 10-year Global benchmark bond issue.
The issue was conducted via Lead Managers Citigroup, Daiwa SMBC, and UBS. A syndicate group was formed with CSFB, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, and Nomura International as Co-lead managers.
The bonds, with a coupon rate of 4.25% per annum payable semiannually and maturity date of 20 October 2014, were priced at 99.252% to yield 23 basis points over the 4.250% US Treasury due August 2014.
The deal marks ADB's first in the US dollar global bond market since January 2003, when it launched its highly successful US$1 billion 2.375% Global Bonds due 15 March 2006.
"The transaction reflects ADB's core funding strategy of maintaining a strong presence in key currency bond markets through regular issuance of liquid benchmark global bonds," says Mikio Kashiwagi, ADB Treasurer.
With volatility in the Treasury market continuing since the beginning of the year, issuance opportunities in the 10-year sector have been infrequent. However, the demand has been very strong when the market direction is right.
With the recent sell off in the Treasury market followed by a market friendly US payroll report on Friday, investors have felt the need to add to the duration of their portfolios making the 10-year sector very attractive. In addition, issuance in the supranational sector has been relatively light over recent months, while the demand for safe, stable instruments from top quality names has been high.
This favorable backdrop, combined with extensive roadshows across Asia and the United States prior to launch, contributed to an oversubscribed book, with about US$1.2 billion of orders at pricing.
As with previous benchmark transactions, the issue achieved broad primary market distribution with 45% of the bonds placed in non-Japan Asia, 21% in Japan, 20% in the US, and 14% in Europe. By investor types, 42% of the bonds went to Central Banks and Government Institutions, 36% to Bank Treasuries, 18% to Fund Managers and 4% Other.
The proceeds of the issue will be part of ADB's ordinary capital resources and used in its non-concessional operations.