ADB, the Asian Development Bank directed a risky rates backdrop printing a dual-tranche US dollar offering. Currently, the Fed has just launched its latest policy meeting. Analysts argued that it is actually not a recommendation for the deal. Meanwhile, ADB keeps rapising $4bn off a $6.8bn book. One of the bankers at DCM added that it is risky to trade ahead of the Fed meeting. However, there is still much funding to get executed. The windows are also very limited. It means that if the opportunity has passed, there is no way of getting into the central bank. So, somehow it is good for the chance.
The DCM banker also noted that the institution has discussed beforehand not to issue a trade over many financial institutions. The epitomes are European CPI, UK bank holidays and trades pricing before the Fed. The timing actually does not fit in, since the event is important. However, it is not like when the Fed starts, dollar trades would come on Monday. He noted that based on the ADB case, the transaction works just like that. ADB aims at copying the success of its previous five-year sale from August for as much as $4.5bn. There are more than twice the subscription, instead the price would be a huge concession.
This time they had a dual-track approach with a two and ten-year tenors target. Those making the initial price announcement are Credit Agricole, Deutsche Bank, Morgan Stanley and RBC. There was no change in the guidance when the books opened. This is following the day with indicators of interest at more than $1.9bn for two year. Then for the 10-year is more than $850m. The books escalate for up to $4.7bn and $2.1bn respectively. This case, leads could launch the $2.75bn 4.123% two-year note at plus 8bp and the $1.25bn 3.875% 10-year tranche at plus 51bp. This calculation is from IFR Asia. The price of the bond is 99.956 and 99.91.
