The ADB timed the deal to avoid clashes with other issues and benefited from a sell-off in the market following the announcement of an adjustment in the value of the Chinese yuan. That helped draw out interest from the central banks and government institutions that are most attracted by the ADB’s top-grade status. Those investors ultimately accounted for 70% of the issue.
Indeed, such was the demand from prime investors – quickly pushing orders past the required $1 billion mark – that joint lead bookrunners Citigroup, Goldman Sachs and Nomura closed the book a day early to avoid disappointment.
“We were both patient and flexible regarding the timing; we always time our deals based on investor demand,” says Juan Limandibrata, head of funding at the ADB.
With the tight spreads it offers, the ADB had to be careful not to conflict with other sales by Spain, SEK and L Bank the previous week. “We monitored the market very carefully before deciding to go ahead,” says Chris Lees, head of the frequent borrower syndicate at Citigroup. “In the context of this deal at this kind of level it was a very strong result,” he adds.
The ADB was happy not to increase the deal, to affirm its consistency in the market, and it was comfortable with the rise in yields that affected the sale, because it swaps its liabilities to floating payments anyway.
Keeping investors satisfied is a crucial part of the ADB’s global deal. The bank could raise the cash in many other ways but likes to keep a line out to the international community, to maintain trust in case its options ever narrow. Rarity value certainly adds to the attraction, with last year’s issue being the ADB’s first five-year transaction since 2002.
Asian investors most familiar with the ADB took the lion’s share of the deal (65%), with 20% going to Europe, and US buyers accounting for 15%.