The Asian Development Bank (ADB) priced its $1 billion 3-year global benchmark bond yesterday after a rapid 24-hour bookbuild.
The bonds, with a coupon rate of 2.125% per annum payable semi-annually and a maturity date of 15 March 2012, were priced at 99.779% to yield 92.25 basis points over the 1.125% US Treasury note due January 2012, or 25bp more than mid-swaps.
"We are very satisfied with the transaction and the swift bookbuilding process, particularly amidst a challenging market backdrop," says ADB treasurer Mikio Kashiwagi. "There was healthy demand from high-quality investors, resulting in an oversubscribed book close to $1.2 billion."
The deal was lead-managed by Daiwa SMBC, Goldman Sachs, Morgan Stanley and UBS. A syndicate group was also formed made up of BNP Paribas, Citi, Credit Suisse, Deutsche, Dresdner, HSBC, Mitsubishi UFJ Securities, Nomura and RBC Capital Markets.
At close of business in Asia, the issue was trading at the reoffer price and was attracting further regional demand, according to a banker close to deal. "There was a fine balance between keeping both investors and the issuer happy, and the pricing managed to achieve that," he says.
About 47% of the bonds were placed in Europe, Middle East and Africa, 36% in Asia and 17% in the Americas. By investor type, around 58% were bought by central banks and financial institutions, 24% by funds, asset managers and insurance companies, and 18% by banks.
Proceeds from the issue will go into ADB's ordinary capital resources for use in its non-concessional operations. Manila-based ADB plans to raise around $9 billion to $10 billion this year. In 2008, the multilateral lending agency raised just over $7 billion from 47 issues denominated in various currencies, according to Dealogic, a data-provider.
Separately, ADB's shareholders have been considering whether to triple its capital to about $165 billion in response to the global economic crisis, and amid growing demand for help from its developing member countries. An increase in credit commitments might also help mitigate any outflow of global funds from the region.
Last year, ADB's president proposed doubling it but faced opposition from the US and the UK, who insisted that the ADB implemented internal reforms. However in January, Japan, which with the US is the bank's biggest shareholder (15.6% each), supported the move to increase the lender's authorised and subscribed capital base of $55.2 billion (September 30, 2008) - which was last increased in 1994. Since it was set up in 1966, ADB has had its capital base raised just four times.
ADB's board of directors will meet in March to decide what to recommend to its 67-member governments, who will then vote on the issue at the annual meeting in early May, to be held in Bali, Indonesia.
