ADB raises $3.4-B

The Asian Development Bank (ADB) has raised $3.4 billion out of its $6.4 billion borrowing program for 2003.

All the transactions, totaling 55, had an average maturity of seven years with the proceeds entirely in US dollars.

"ADB diversifies its funding sources across markets, instruments, and maturities to ensure that funds are available to meet its cash requirements at the lowest possible cost," ADB assistant treasurer Juan Limandibrata said in a statement.

Limandibrata said that key to the ADB’s strategies is to maintain a strong presence in the international capital markets through the regular issuance of benchmark global bonds.

At the start of the year, it launched a three-year $1-billion global bond issue at 2.375 percent rate through a syndicate headed by Lehman Brothers and UBS Warburg.

The ADB claims that the issue drew robust demand from institutional investors globally. Of the total issue, about 47 percent of the bonds are placed in Asia, 34 percent in the United States, and the remaining 19 percent in Europe and the Middle East.

The funding agency likewise issues bonds on an opportunistic basis to generate funds at the lowest cost possible.

It raised $2.4 billion, or almost 70 percent of its borrowings in such manner this year. Of the amount, $1.8 billion was raised through seven bond issues placed with the Japanese retail market.

The remaining $600 million was raised through 47 structured bond issues targeted at institutional investors in Asia. In line with current policy, all structured borrowings have been swapped on a fully hedged basis into US dollar floating rate liabilities.

"The key element here is to be quick and responsive to arbitrage opportunities and changes in investor requirements" Limandib-rata noted. "In this regard, ADB can execute borrowing transactions on short notice and with size, structure, and maturity designed to meet investors’ specific preferences."

In the past year, the attractive costs associated with these borrowings have contributed to lowering the lending rates of ADB’s LIBOR-based loans through rebates. For example, the rebates on interest payable under these LIBOR-based loans for the period of July-December 2002 amounted to 39 basis points.