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ADB Issues P2.5 Billion In Philippine Peso Bonds

MANILA, PHILIPPINES (28 October 2005) - The Asian Development Bank (ADB) priced today its debut Philippine peso bonds in the domestic capital market of the Philippines. The issue has a principal amount of P2.5 billion and a bullet maturity of five years and one day. The sole lead manager and sole Bookrunner of the issue was HSBC.

Priced at 65.31%, ADB's peso bonds have an implied yield of 8.7% per annum and were priced at a spread of 6 basis points over the five-year tax-adjusted MART1 rate.

Offered through a bookbuilding process, the issue was oversubscribed and achieved a broad distribution with institutional investors in the Philippines including banks, insurance companies, fund management companies, and trust departments.

ADB's peso bond issue represents many firsts in the Philippine capital market: first issue by a foreign entity; first supranational issue; and first issue rated triple-A by Fitch Ratings, Moody's and Standard & Poor's.

"The peso bond issue represents another milestone in ADB's quest for developing the region's bond markets," says ADB Vice-President Khempheng Pholsena. "It represents ADB's fifth market-opening transaction since early 2004, following ADB's inaugural bond issues in India and Malaysia in 2004, and Thailand and the People's Republic of China this year."

The proceeds of the bond issue will be used for a peso-denominated loan to Balikatan Housing Inc. (BHI), a special purpose vehicle jointly-owned by National Home Mortgage Finance Corporation (NHMFC) and Deutsche Bank.

BHI was set up for the purchase and resolution of a portfolio of nonperforming loans (NPLs) from NHMFC. The project will have significant benefits for the Philippines, as it will play a pioneering role in the distressed asset market, directly strengthen the financial position of several government-linked entities, and provide delinquent NHMFC borrowers an opportunity to restructure their obligations.

"ADB would like to thank the Philippine Government for its extensive support in making this market-opening transaction possible," says ADB Treasurer Mikio Kashiwagi. "ADB is particularly pleased to have been given the opportunity to be the first multilateral issuer in the Philippine bond market."

Warner Manning, President and Chief Executive Officer of HSBC expressed his delight at the launch. "HSBC is pleased to have arranged another pioneering issue, now for a very important institution such as ADB, whose work significantly impacts on the development of the Philippines," he said. "We are delighted to have successfully addressed ADB's financing requirement while offering investors attractive value and credit diversification."

Wick Veloso, HSBC Treasurer, adds, "Since this issue is the first Peso bond issue by a multilateral agency and the first by an issuer rated 'AAA' by all three international rating agencies, these bonds provide an avenue by which to diversify investors' local currency bond portfolios and address credit concerns associated with most local issuers' ratings being capped at the Sovereign BB- level."

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 64 members, with 46 from the region. In 2004, it approved loans and technical assistance totaling $5.3 billion and $196.6 million, respectively.

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