Asian Development Bank (ADB) has launched a benchmark US dollar bond issue and will price it later today, according to market sources. The size of the deal will be at least $1 billion.
Daiwa Securities, Goldman Sachs, Morgan Stanley and UBS are believed to be mandated to sell the bonds, and global bookbuilding is underway.
The deal is likely to have a three-year tenor and be priced at around 25 basis points over mid-swap rates, in line with where other triple-A rated issues are trading, according to a banker close to the deal.
He adds that the response in Asia across different types of accounts has been "very enthusiastic".
Sticking to normal policy, ADB would not comment on the rumour about a pending bond issue. However, Ann Quon, director of media relations at the Manila-based multilateral lending agency said that the "ADB plans to raise between $8 billion and $10 billion this year in various currencies".
ADB raises funds through bond issues on the world's capital markets, but also deploys its members' contributions and the interest earned from its loans.
Last year, ADB raised just over $7 billion from 47 separate issues denominated in various currencies, according to data-provider Dealogic. They included two US dollar deals worth $1 billion or more.
The triple-A rated multilateral lender has a mandate to help promote economic and social development in Asian and Pacific countries. It was set up in 1966, and is owned predominantly by countries within the region, but also by 19 countries from other parts of the world. ADB exercises its mandate through loans and technical assistance, and has been especially active in infrastructure investment and helping poorer countries develop their natural resources. The current global financial crisis might mean a shift back towards aiding those countries whose rapid economic advance has reduced their need for assistance in recent years.
But already this year, Asian borrowers have tapped the international bond markets. Last month, the Republic of the Philippines raised $1.5 billion with a 10-year issue, and two state-owned Korean policy banks - Export-Import Bank of Korea and Korea Development Bank - each raised $2 billion with five-year issues. Meanwhile, ministry of finance officials from Indonesia are currently visiting investors in London before travelling to the US and then back to Asia next week, while the Republic's advisors arrange a $4 billion global medium-term note programme.
In difficult credit markets, clearly this is encouraging and lifts hopes that other Asian borrowers will be able to access the markets in coming weeks.