ADB Sells Dual-Tranche $750 Million 5-Year and $500 Million 10-Year Global Green Bonds to Spur Climate Financing
MANILA, PHILIPPINES (2 August 2017) — The Asian Development Bank (ADB) has raised $1.25 billion to help finance climate change mitigation and adaptation projects with the issue of dual-tranche 5-year and 10-year green bonds.
“ADB is responding to the rapidly growing demand for green bonds with our second dual-tranche outing and our first 5-year green bond offering,” said ADB Treasurer Pierre Van Peteghem. “We have found the dual-pronged approach taken today to be an efficient means of reaching ethical investors active at different segments of the yield curve. This approach means that ADB is reaching an increasing number of investors who understand the importance of the green label.”
Proceeds of the green bonds will support low-carbon and climate resilient projects funded through ADB’s ordinary capital resources and used in its non-concessional operations.
In 2015, ADB announced that it would double its annual climate financing to $6 billion by 2020. ADB’s support for climate change will rise to around 30% of its overall financing by the end of this decade. Out of the $6 billion, $4 billion will be dedicated to mitigation through scaling up support for renewable energy, energy efficiency, sustainable transport, and building smart cities, while $2 billion will be for adaptation through more resilient infrastructure, climate-smart agriculture, and better preparation for climate-related disasters.
The 5-year bond has an issue size of $750 million, a coupon rate of 1.875% per annum payable semi-annually and a maturity date of 10 August 2022. It was priced at 99.531% to yield 16.3 basis points over the 1.875% US Treasury notes due July 2022. The 10-year bond has an issue size of $500 million, a coupon rate of 2.375% per annum payable semi-annually and a maturity date of 10 August 2027. It was priced at 99.172% to yield 20.5 basis points over the 2.375% US Treasury notes due May 2027.
The transactions were lead-managed by Bank of America Merrill Lynch, Credit Agricole CIB, and J.P. Morgan. A syndicate group was also formed consisting of Citi, HSBC, Morgan Stanley, and TD Securities.
Both issues achieved wide primary market distribution with 24% of the 5-year bonds placed in Asia; 29% in Europe, Middle East, and Africa; and 47% in the Americas. By investor type, 38% of the bonds went to central banks and official institutions; 31% to banks; and 31% to fund managers. For the 10-year bonds, 13% were placed in Asia; 69% in Europe, Middle East, and Africa; and 18% in the Americas. By investor type, 25% of the bonds went to central banks and official institutions; 52% to banks; and 23% to fund managers.
ADB plans to raise around $27 billion to $30 billion from the capital markets in 2017.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 countries—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.