October 23, 2017 / 3:58 PM / in a year

ADB, CPPIB see window for 10-year US dollar bonds

LONDON, Oct 23 (IFR) - Asian Development Bank will be testing the 10-year US dollar market again after issuing a US$500m bond with a similar maturity in August.

It mandated Citigroup, Daiwa, HSBC and JP Morgan for a Global benchmark transaction, with IPTs coming at 24bp area over mid-swaps.

US dollar supply from public sector issuers in maturities longer than five-years has been rare in 2017, with just over a handful of borrowers accessing that part of the curve.

“There was a feeling among banks that it was time to push the button - yields have gone where they need to go,” said a lead.

“It can be a bit more troublesome than three-years and five-years, but for a name like ADB, everyone’s got a line to buy.”

According to the banker, yields in Treasuries have backed up recently on the back of muted inflation data and progress in the US towards the approval of tax cuts.

Treasury yields went from 2.3bp to 2.37bp over the past week.

ADB has been looking at the market for a little while, said another lead.

“Their August 2027 bond is trading at 19bp over mid-swaps so on paper there is some concession,” he said.

There is a clear window for a 10-year, he added, although investors are primarily hungry for three and five-years.

“Maturity is a bit more difficult to pin down because investors are sensitive to yield and spreads versus Treasuries. They’re looking at the short-end of the curve,” said the banker.

However, ADB’s good following in Asia should be supportive, he added.

Canada Pension Plan Investment Board is also looking at a 10-year, a US$1bn no-grow. Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank and TD are marketing at low 40s area over mid-swaps. (Reporting by Melissa Song Loong; editing by Philip Wright, Alice Gledhill)

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