ADB Investor Presentation...8 Non-Borrowing Shareholders Ratings 2 2015 Borrowing Shareholders...

INVESTOR PRESENTATION August 2016

ADB Treasury Department www.adb.org/site/investors/main 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines

2

Asian Development Bank

Funding Operations

Green Bond Framework

Appendices

3

An Asia and Pacific region free of poverty

ADB’s Mission

ADB’s Vision

To help our developing member countries reduce poverty and improve quality of life

ADB’s Mode of Operation ADB finances projects and programs in the territories of its developing members. Main instruments comprise loans, equity investments, guarantees, grants, and technical assistance. ADB also provides policy dialogues and advisory services and mobilizes financial resources through its cofinancing operations.

OUR STRUCTURE • An international development finance

institution

• President Takehiko Nakao

• Headquartered in Manila, Philippines

• Founded in 1966

• Owned by 67 members : 48 regional, 19 non-regional

• 31 field offices1

• 3,105 employees from 59 countries1

1/ As of 31 December 2015

HOW WE HELPED IN 2015

4

Total approved financing2 in

2015: $27.17 billion

2/ Includes Ordinary Capital Resources, Special Funds Resources and Cofinancing Operations

It remains home to half of the world’s extreme poor

451 million in developing Asia live on $1.90 a day

260 million people lack access to improved drinking water supply

1.5 billion people are still without sanitation access

1 out of 24 children dies before reaching age 5

5

The Region’s

Poverty Challenge

7

ADF-OCR MERGER to Boost Support for Region’s Poor

ADB’s Board of Governors recently approved a groundbreaking initiative to combine the lending operations of the bank’s Asian Development Fund (ADF) with its ordinary capital resources (OCR) balance sheet.

The merger will become effective on January 1, 2017.

The merger will boost ADB’s total annual lending and grant approvals to as high as $20 billion— 50% more than the current level. ADB assistance to poor countries will rise by up to 70%.

The merger will further strengthen ADB’s creditworthiness and is perceived favorably by rating agencies:

1. Strengthen ADB’s business profile (franchise value, etc.)

2. Enhance financial profile (almost triple OCR equity base)

3. Provide further diversification of OCR loan portfolio.

8

Non-Borrowing Shareholders Ratings2 2015 Borrowing Shareholders Ratings2 2015

Japan A1/A+ 15.6% People's Republic of China Aa3/AA- 6.5%

United States Aaa/AA+ 15.5% India Baa3/BBB- 6.3%

Australia Aaa/AAA 5.8% Indonesia Baa3/BB+ 5.5%

Canada Aaa/AAA 5.2% Malaysia A3/A- 2.7%

Republic of Korea Aa2/AA- 5.0% Philippines Baa2/BBB 2.4%

Germany Aaa/AAA 4.3% Pakistan B3/B- 2.2%

France Aa2/AA 2.3% Thailand Baa1/BBB+ 1.4%

United Kingdom Aa1/AA 2.0% Bangladesh Ba3/BB- 1.0%

Italy Baa2/BBB- 1.8% Others 5.4%

New Zealand AAA/AA 1.5%

Others 7.5%

27 Countries 66.7% 40 Countries 33.3%

Totals may not add up because of rounding.

1/ Percent of Total Subscribed Capital as of 31 December.

2/ Moody’s and Standard & Poor’s ratings are as of 28 July 2016. (Source: Bloomberg)

Strong Shareholder Support

ADB has raised its capital base five times since 1966

Callable capital is available for the protection of ADB’s bondholders

ADB has never made a call on its callable capital

9

Growth in ADB’s capital base

Solid Capital Structure

GCI-I

1.0

GCI-II

3.7

GCI-III

11.5

GCI-IV

30.2

Pre-GCI-V

54.9

GCI-V

149.3

0.0

30.0

60.0

90.0

120.0

150.0

180.0

1971 1976 1983 1994 2008 Mar-16

$ bn

Callable Capital Paid-In Capital

$billion

Paid-in capital 7.5

Callable capital 141.8

Subscribed capital 149.3

ADB Capital Structure as of 31 March 2016

TOTAL – $179.6 billion

Cumulative, as of 31 March 2016

Legend:

$0 - $500 million $5,001 - $10,000 million

$501 - $2,000 million $10,001 - $15,000 million

$2,001 - $5,000 million $15,001 million - and above

10

Indonesia

$29,211 mn

Papua New Guinea

$1,049 mn

Fiji

$420 mn

Nauru

$5 mn

Federated States of Micronesia

$9 mn

Marshall Islands

$4 mn

Regional

$192 mn

Republic of Korea

$6,335 mn

People’s Republic

of China

$33,600 mn

Thailand

$6,545 mn

Malaysia

$1,994 mn

Lao People’s

Democratic Republic

$214 mn

India

$36,937 mn

Sri Lanka

$3,135 mn

Pakistan

$16,703 mn

Nepal

$49 mn Afghanistan

$135 mn

Kazakhstan

$4,383 mn

Uzbekistan

$4,201 mn

Mongolia

$586 mn Azerbaijan

$2,242 mn

Hong Kong, China

$102 mn

Singapore

$178 mn Philippines

$15,463 mn Viet Nam

$7,592 mn

Taipei,China

$100 mn

Bangladesh

$5,705 mn

Cambodia

$83 mn

Georgia

$1,066 mn

Republic of the Maldives

$12 mn

Bhutan

$121 mn

Republic of

the Union

of Myanmar

$349 mn

Cook Islands

$41 mn

Armenia

$513 mn

Palau

$56 mn

Turkmenistan

$125 mn

Kyrgyz Republic

$20 mn

Timor-Leste

$136 mn

Approved Loans by Borrower

Tajikistan

$5 mn

1/ Ordinary Capital Resources (OCR) Outstanding Effective Loans include Loans Outstanding at $63.1 billion (gross) and Undisbursed Effective Loans at $27.7 billion. Sovereign at $84.6 billion (93%) and Non-sovereign at $6.2billion (7%).

11

$90.8 billion1 as of 31 March 2016

Outstanding Effective Loans

90.3% Sovereign, 9.7% Non-sovereign as of 31 March 2016

1/ The sum of disbursed and outstanding loan balances, present value of guaranteed obligations and fair values of equities.

12

Operation Portfolio1 by Country

13

ADB lends primarily to the governments of member countries who afford ADB preferred creditor status.

1/ Includes Loans Outstanding and Undisbursed Effective Loans as of 31 March 2016.

High Asset Quality

ADB has strict policy with regard to non-accrual loans. If loan is overdue by:

• 60 days – no new loans

• 90 days – suspension of disbursements

• 6 months – non-accrual status

Balance Sheet Overview 31 March 2016

Net Loans 1 $63.1bn

Other 2

$34.9bn

Investments

$27.6bn

TOTAL = $125.6bn

ASSETS

Borrowings $71.5bn

Other 2 $36.3bn

Equity $17.8bn

TOTAL = $125.6bn

LIABILITIES & EQUITY

14

1/ Net of allowance for loan losses and inclusive of net unamortized loan origination costs. 2/ Mostly derivative assets and liabilities. Net derivative liability is $1.7 billion.

Conservative Financial and Risk Management Policies

CONTENTS

15


Funding Operations


Appendices

16

Agency Rating

FitchRatings AAA

Moody’s Aaa

Standard & Poor’s AAA

ADB as a Borrower

ADB is a leading AAA borrower in international and domestic capital markets, having issued bonds across various markets in 32 currencies.

Borrowings finance Ordinary Capital Resources (OCR) operations. OCR loans are generally made to developing members that have attained a higher level of economic development.

ADB’s debt securities carry the highest possible investment ratings from major international credit rating agencies.

17

AAA Rating based on Strong Fundamentals

“We base our ratings on AsDB on our assessment of its

extremely strong business profile and very strong

financial profile. We consider the unwavering public

policy mandate and the preferred creditor treatment for

the bank as key strengths. We expect the AsDB to

maintain its healthy liquidity position, strong funding

presence, and high capitalization level.”– Standard and

Poor’s, July 2016

“The Asian Development Bank's (ADB) Aaa long-term

issuer and debt ratings are supported by the bank's

strong capital adequacy, ample liquidity buffers, and

preferred creditor status. Strong shareholder support

further enhances the ADB's robust financial

performance. The bank’s credit strengths, that have

remained intact through recent periods of global and

regional economic stress, have also been backed by

prudent financial management.” – Moody’s, July 2016

“Due to its preferred creditor status, AsDB enjoys

extremely low levels of loan impairments. The average

rating of loans is BBB- as of FY-2014, which compares

favourably to AAA-peers, and reflects the excellent

performance of its loan book (no impairment on its

sovereign portfolio). ” – FitchRatings, July 2015

18

Selected Bond Issuances by ADB in Asia and the Pacific

2016 Singapore Hong Kong, China India Georgia

SGD 100mn bond CNY 130mn bond INR 3bn bond GEL 64mn bond

2005 People’s Republic of China Philippines Thailand

CNY 1bn bond PHP 2.5bn bond THB 4bn bond

2015 Georgia GEL 100mn bond 2004 India Malaysia Singapore

INR 5bn bond MYR 400mn bond SGD 200mn bond

2014 India Hong Kong, China

INR 3bn bond CNY 1.0bn bond

1998 Australia AUD 1bn bond

2013 Singapore SGD 500mn bond 1995 Taipei,China Republic of Korea

NTD 2.6bn bond KRW 80bn bond

2010 Hong Kong, China New Zealand

CNY1.2bn bond NZD 225mn bond

1970 Japan JPY 6bn bond

2007 Kazakhstan KZT 6bn bond

19

OUTSTANDING BORROWINGS1 – $71.5 billion

1/ As of 31 March 2016

United States

Canada Norway

United Kingdom Netherlands

Germany

Luxembourg Switzerland

Italy

Belgium

Austria

Kuwait

Saudi

Arabia

Brazil

People’s

Republic of

China

India Thailand

Malaysia

Singapore

Philippines

New Zealand

Australia

Japan

Hong Kong, China

Republic

of Korea Taipei,China

Kazakhstan

Mexico

South Africa

Turkey

ADB Borrowings across Currencies

Euro

Georgia

Borrowing Program: 2005 – 2016

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Amount

(actual, $ billion)4 5 9 9 10 15 14 13 12 14 19

20

(indicative)

20

1/ ECP dealers include Banc of America Securities Limited, Barclays, Citibank, Goldman Sachs, ING Bank N.V., and UBS.

Ensure availability of funds at all times to meet operational needs

Benchmark issuance Public bond issues

Structured private placements and other reverse

inquiries

Retail targeted transactions

Local currency bond issuance

ECP Program1

Funding Availability at all times

Denominated in US Dollar and Euro

In 2, 3, 5, 7 or 10-year maturities

About $1 billion to $3.25 billion in

size

Issued at least once a year

Documentation

GMTN Programme

Clearing

Federal Reserve Book-Entry

System

Euroclear and Clearstream

GLOBAL BENCHMARK BONDS

ADB bonds issued in Australia, Canada, New

Zealand, Singapore, Switzerland, and UK are

repo-eligible

Included in various indices:

Barclays Capital Global Aggregate Index

Citigroup WBIG

JPM Euro Sterling Index

Markit iBoxx USD Indices

UBS Composite Bond Index – Australia

UBS Supra-Sovereign Index

Documentation and Clearing

GMTN Programme - Euroclear and

Clearstream; DTC

AUD MTN Programme - Austraclear;

Euroclear and Clearstream

NZD MTN Programme - Austraclear NZ

System; NZ Clearing System

ACN Programme - CDP; HKMA; BNM; PDEx (if

applicable), TDCC; Euroclear and Clearstream

MYR MTN Programme – Bank Negara

Malaysia

FUNDING PLATFORMS

Tailor-fit to meet investor

requirements (currency, size, tenor,

structure)

Thematic bonds: Water, Clean

Energy and Green bonds

Uridashi notes

Retail-targeted bonds

Structured notes

Documentation

GMTN Programme

ACNP Programme

PRIVATE PLACEMENTS

21

Financing Instruments

0

1

2

3

4

5

6

7

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jul-16

Ave. maturity in years

$bn

Global $/€ Benchmark Bonds

Public Bond Issues

Local Currency

Other private placements

(institutional,Uridashi, retail-targeted)

Structured privateplacements

Average maturity

(based on first call date)

Borrowings by Type: 2005 – YTD 2016

Note: Excluding Euro-Commercial Paper issuances (ECPs). Year 2016 figures include trades up to 28 July 2016. 22

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jul-16

No. of Currencies 7 13 13 7 7 9 9 8 10 11 11 14

No. of Transactions 64 51 94 113 44 92 68 77 58 50 56 44

Diversified Product and Currency Mix

1.90

0.30

3.00

1.00

2.30

1.00

0.50

1.00

0.78

2.50

2.10

2.00

1.00

1.25

3.25

1.00

1.50

0.65

1.05

2.25

1.15

1.00

2.20

3.00

0.50

1.00

2.25

1.50

0.50

1.00

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

2017

2017

2017

2017

2017

2017

2017

2018

2018

2018

2018

2018

2018

2018

2019

2019

2019

2019

2019

2020

2020

2020

2020

2021

2021

2021

2022

2025

2025

2026

US$bn

Year of Maturity

1.750% Global Bonds of 2013

FRN PO of 2014


FRN PO of 2014





FRN PO of 2015


2.125% Global Green Bonds of 2015





FRN PO of 2015

FRN PO of 2016



FRN PO of 2016

1.625% Global Bonds of 2016 FRN PO of 2016

23

USD Public Offerings outstanding:

Over $44 billion USD Global benchmark

bonds issued YTD 2016: $9.75 billion 0% risk-weighted

(Basel II) Strong sponsorship

from underwriters Robust participation

from broad investor base

Selected US$ Public Bond Issuances


2.250% Eurodollar PO of 2010





ADB in the US Dollar Market

Floating Rate Note

Fixed Rate Note


FRN PO of 2016

24

BY GEOGRAPHY BY INVESTOR TYPE

Investors Demand for USD Global Bonds

Note: Includes fixed, floating rate note (FRN) and reopenings on Global format. Percentages may not total 100% because of rounding.

25

ADB has maintained a consistent presence in the Kangaroo market since 2006 with at least one issuance per year. As of 28 July 2016, ADB has A$8.8 billion principal outstanding.

Year to date, ADB has issued about A$625 million in Kangaroo bonds.

AMOUNT COUPON MATURITY

A$225 mn 3.00% Oct 2026

A$700 mn 3.75% Mar 2025

A$150 mn 4.50% Sep 2023

A$800 mn 5.00% Mar 2022

A$300 mn 2.80% Jan 2021

A$1.0 bn 6.25% Mar 2020

A$1.2 bn 2.60% Jan 2020

A$200 mn Floating May 2019

A$1.0 bn 3.50% May 2019

A$650 mn 3.50% Jul 2018

A$700 mn 6.00% Feb 2018

A$200 mn Floating Jul 2017

A$1.2 bn 3.50% Jul 2017

A$500 mn 3.00% Nov 2016 0.500

1.200

0.200

0.700

0.650

1.000

0.200

1.200

1.000

0.300

0.800

0.150

0.700

0.325

0.000 0.500 1.000 1.500

2016

2017

2017

2018

2018

2019

2019

2020

2020

2021

2022

2023

2025

2026

A$bn

Year of Maturity

Floating Rate Note

Fixed Rate Note

ADB in the Kangaroo Market

26

BY GEOGRAPHY BY INVESTOR TYPE

Investor Demand for Kangaroo Offerings

27

0.150

1.000

0.950

0.300

0.200

0.000 0.200 0.400 0.600 0.800 1.000 1.200

2016

2017

2019

2020

2021

NZ$ bn

Year of Maturity

3.875% NZ$300mn due Jan 2020

4.125% NZ$150mn due Oct 2016 3.250% NZ$1.0bn due Jul 2017

4.625% NZ$950mn due Mar 2019

As of 28 July 2016, ADB has NZ$2.6 billion principal outstanding across five maturities.

ADB in the Kauri Market

2.875% NZ$200mn due Apr 2021

28

0.475

0.250

0.425

0.000 0.100 0.200 0.300 0.400 0.500

Dec 2016

Dec 2017

Dec 2018

£ bn

Year of Maturity

As of 28 July 2016, ADB has £1.15 billion principal outstanding across three maturities.

Amount Coupon Maturity

£425mn 1.00% Dec 2018

£250mn 1.50% Dec 2017

£475mn 1.00% Dec 2016

ADB in the Sterling Market

BY INVESTOR TYPE BY GEOGRAPHY

29

In 2005, ADB issued its inaugural RMB 1.0bn onshore RMB bonds (the "Panda Bonds") in China. ADB is the first foreign issuer in the onshore RMB market.

In 2010, ADB successfully launched its first offshore RMB bonds (the "Dimsum Bonds") with a principal amount of RMB 1.2bn with a 10-year maturity, extending the yield curve for the offshore RMB market.

To date, ADB has RMB 3.5bn outstanding bonds, of which RMB 2.5bn are issued offshore.

AMOUNT COUPON MATURITY

RMB1.2 bn 2.85% Oct 2020

RMB1.0 bn 4.20% Dec 2019

RMB1.3 bn 3.20% Nov 2019

ADB in the Onshore/Offshore RMB Market

1.3

1.0

1.2

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4

2019

2019

2020

Year of Maturity Offshore

Onshore

RMB bn

30

Private Placements: 2005 – YTD 2016

Responds to investor needs:

Quick execution time

Flexible issue size

Broad maturity range

Varied currency and interest rate structure Note: Includes structured notes, institutional and retail-targeted transactions. Year 2016 figures include trades up to 28 July 2016.

59 issues

43 issues

84 issues 102 issues

35 issues

72 issues

52 issues

60 issues

36 issues 24 issues

30 issues 29 issues

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$ bn

Dynamic Participation in Private Placements

28

42

44

119

125

204

229

237

283

562

816

829

1,083

1,320

1,353

1,544

1,882

1,919

7,492

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

THB

GEL

INR

NOK

MYR

CHF

ZAR

HKD

MXN

CNY

SGD

TRY

JPY

BRL

CAD

GBP

NZD

EUR

AUD

US$ mn

31

Outstanding Non-USD Issuances

1/ As of 30 June 2016.

2/ Excluding Euro-Commercial Paper issuances.

3/ BRL issuances are payable in USD or JPY.

4/ INR issuance is payable in USD.

Multi-currency Issuances

ADB’s thematic bonds highlight its efforts to support key initiatives such as its water programs and clean energy projects through its AAA quality notes.

32

ADB launched its first ever topical bonds (Uridashi) in 2010:

Two-tranche Water Bonds (total amount of $638 million equivalent)

Four-tranche Clean Energy Bonds (total amount of $233 million equivalent)

In 2015, ADB has raised an equivalent of about $177 million from its sale of water bonds.

ADB has issued approximately $2.3 billion equivalent in clean energy and water bonds since 2010.

Foray into Thematic Bonds

33

Maturity Profile of Outstanding Borrowings

As of 30 June 2016

Note: Based on notional amounts. Bonds with put and call options were considered maturing on the first put or call date. Includes ECPs.

Redemption Profile

CONTENTS

34


Funding Operations


Appendices

35

4.2 Billion

Population in Asia

1.8 Billion

No. of people w/o

access to clean cooking

615 Million People without

access to electricity

Energy Access in Asia and Pacific Region

ADB incorporates the principles of environmental sustainability in its investments across the region.

Background

• Asia’s overall national infrastructure needs are estimated to be around $8 trillion over 2010-2020 or approximately $730 billion per year with key priorities in energy and transport (82%)*

• Sustainable energy and transport solutions are not only good for the environment but are key national security issues for many developing and developed Asian countries

• ADB recognizes the importance of sustainable investments in the region and have been investing over $2 billion in clean energy projects each year since 2011.

36

* ADBI 4 Sept 2013.

Overview: ADB’s Project Cycle

37

1. Country Partnership

Strategy

ADB

Project

Cycle

2. Preparation

3. Approval

4. Implementation

5. Evaluation

Source: http://www.adb.org/projects/cycle

Green Bond Framework1

1. Project eligibility: ADB’s Green Bond Framework defines eligible projects to support developing member countries seeking to adapt to and mitigate the consequences of climate change

2. Project Selection: The project selection criteria will be implemented by sector specialists in coordination with the treasury department

3. Proceeds: Green bond proceeds will be allocated to a subportfolio and tracked against disbursement of eligible projects

4. Reporting: ADB will make available eligible project list and green bond annual newsletter online

1/ With second opinion.

38

Source: http://www.adb.org/sites/default/files/adb-green-bonds-framework.pdf

Highlights

ADB successfully priced a US$500 million Global green bond transaction due 19 March 2025. The bond pays a coupon of 2.125%.

The bond was priced at a spread of +1 bp over Mid Swaps, and +12.45 basis points over the 2.0% US Treasury Notes due February 2025.

On 12 March 2015, ADB

successfully priced a

US$500 million Global

Green bond.

Pricing Details

Overall Distribution by Investor Type Overall Distribution by Geography

39

Issuer: ADB

Ratings: Aaa/AAA/AAA

Format: Global

Size: US$500mn

Pricing Date: 12 Mar 2015

Settlement Date: 19 Mar 2015

Maturity Date: 19 Mar 2025

Coupon: 2.125%

Re-offer: Mid Swaps+1 bp

UST + 12.45 bps

Bookrunners:

Bank of America Merrill

Lynch

Morgan Stanley

SEB AG

ADB US$500 Million 10-year Global Green Bond

Asia31%

Europe37%

Middle East & Africa8%

US22%

North America ex-US

2%

Central Banks/ Official

Institutions16%

Banks22%

Fund Managers/ Insurance/ Pension

61%

Others1%

Eligible Project Criteria

Eligible Projects: selected pool of projects funded, in whole or in part, by ADB that promotes the transition to low-carbon and climate resilient growth as determined by ADB

√ Mitigation

– Renewable Energy

• Solar • Wind • Geothermal • Small Hydro ( 20MW and below)

– Energy Efficiency1

– Sustainable Transport

√ Adaptation – Energy1 – Water and other Urban Infrastructure and Services – Transport

1/ Excludes fossil fuels.

40

Eligible Project: Sarulla Geothermal Power Development, Indonesia

PROJECT CATEGORY: Renewable energy TOTAL LOAN: $250 million OUTPUTS: Approximately 350MW renewable power

to be commissioned

EXPECTED RESULTS: About 1.3 million tons of CO2 emissions

avoided per year (30 years project life)

41

PROJECT CATEGORY: Transport

TOTAL LOAN: $405 million

(of which $300 million is OCR)

OUTPUTS:

About 100,000 e-trikes operating by 2017

5 solar charging stations of 200 kW each

Lithium Ion battery supply chain created

EXPECTED RESULTS:

About 332,150 tons of CO2 emissions reduced per year (10 years project life)

42

Eligible Project: Energy-Efficient Electric Vehicles, Philippines


Funding Operations


Appendices

43

APPENDIX 1: ADB IN THE NEWS

44

45

ADB in the News

ADB sells $3bn bond in US market By: Emma Rumney 9 Mar 16

The Asian Development Bank has re-entered the US dollar bond market with the sale of a $3bn, five-year global benchmark bond. The bank, which aims to raise a total of $20bn from capital markets this year, said the proceeds of the bond will become part of its ordinary capital resources and used in its non-concessional operations. “This is another stellar outcome for the ADB against a challenging backdrop that has prevailed since the beginning of 2016,” said ADB treasurer Pierre Van Peteghem. “Strong demand for the transaction allowed us to size a $3bn new issue in line with our strategy of providing the market with liquid benchmark bonds across the curve.” Van Peteghem added that the bank is pleased by the geographically diverse investor participation, with 46% of bonds placed in Asia, 29% in Europe, the Middle East and Africa and 25% in the Americas. He said this is “testament to the institution’s robust credit fundamentals and loyal global following in the capital markets”. The majority (58%) of bonds went to central banks and official institutions, with banks taking a further 29% and the remaining 13% brought by fund managers and other types of investors. The five-year bond has a coupon rate of 1.625% payable semi-annually and a maturity date of 16 March 2021.

ADB adds to dual tranche dollar trend as OeKB aims for threes

The Asian Development Bank and Oesterreichische Kontrollbank hit screens with

dollar deals on Monday, with ADB adding more supply to a burst of dual tranche

trades the included deals last week by the World Bank and the Japan Bank for

International Cooperation.

By: Ben Jaglom 18 April 2016

ADB mandated leads Bank of America Merrill Lynchh, BNP Paribas, Goldman

Sachs and Mizuho for a dual tranche global deal at two and 10 years. Initial price

thoughts of 8bp area over mid-swaps were circulated for the two year bond and

42bp area over swaps for the 10 year.

The decisions to opt for a dual tranche follows last week’s deals by the World Bank

and JBIC in dual tranche formats. World Bank printed at two and seven years on

12 April while JBIC went for a deal at 5 and 10 years the same day.

“There are a number of reasons why so many issuers are opting for dual tranche

deals,” said a head of SSA syndicate on the deal.

“There is a window of opportunity that issuers are spotting in the market after the

dismal start to the year we had and the global decline in equity prices. Doing a

dual tranche enables issuers to minimize their execution risk while also limiting the

number of times they have to come to the market.”

A head of SSA syndicate on the deal said that funding conditions were likely to stay

strong in April .

“We began April with a great deal of supply and we felt that this would be a great

moment to get in early while investors remained in key spirits,” he said.

http://www.nasdaq.com/


46

ADB in the News

ADB Sells $3.25 Billion 3-Year Global Benchmark Bond M2 Communications 01/07/2016 4:41 AM ET

MANILA, PHILIPPINES - The Asian Development Bank (ADB) has

returned to the US dollar bond market with the pricing of a $3.25

billion 3-year global benchmark bond, proceeds of which will be part of

ADB's ordinary capital resources and used in its non-concessional

operations.

"This is a fantastic outcome and represents ADB's largest-ever global

benchmark transaction issued to date. We were definitely pleased by

the level of oversubscription in the order book with investor interest in

excess of $4 billion, testament to the institution's robust credit

fundamentals and loyal global following in the capital markets," said

ADB Treasurer Pierre Van Peteghem.

The 3-year bond, with a coupon rate of 1.375% per annum payable

semi-annually and a maturity date of 15 January 2019, was priced at

99.655% to yield 23.2 basis points over the 1.250% US Treasury notes

due December 2018.

The transaction was lead-managed by Bank of America Merrill Lynch,

HSBC, Morgan Stanley, and TD Securities. A syndicate group was also

formed consisting of BMO Capital Markets, BNP Paribas, Citi, Credit

Agricole, Credit Suisse, Daiwa, Deutsche Bank, J.P. Morgan, Mizuho,

Nomura, RBC Capital Markets, and Standard Chartered.

The issue achieved wide primary market distribution with 35% of the

bonds placed in Asia, 34% in Europe, Middle East, and Africa, and 31%

in the Americas. By investor type, 68% of the bonds went to central

banks and official institutions, 20% to banks, and 12% to fund

managers and other types of investors.

ADB plans to raise around $20 billion from the capital markets in

2016.

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, it is

owned by 67 members - 48 from the region.

ADB $2 Billion 5-Year Global Benchmark Issue M2 Communications 08/20/2015 3:41 AM ET

MANILA, PHILIPPINES - The Asian Development Bank (ADB)

returned to the US dollar bond market yesterday with the pricing

of a $2 billion 5-year global benchmark bond issue, proceeds of

which will be part of ADB's ordinary capital resources and used in

its non-concessional operations.

"We are pleased with the transaction and the consistent

sponsorship from investors globally which allowed us to upsize

the transaction to $2 billion," said ADB Treasurer Pierre Van

Peteghem.

The 5-year bond, with a coupon rate of 1.625% per annum

payable semiannually and a maturity date of 26 August 2020,

was priced at 99.461% to yield 16.1 basis points over the

1.625% US Treasury notes due July 2020.

The transaction was lead-managed by Bank of America Merrill

Lynch, Goldman Sachs, JP Morgan and RBC. A syndicate group

was also formed consisting of BNP Paribas, Citi, Credit Suisse,

Daiwa, DBS Bank, Deutsche Bank, HSBC, Morgan Stanley,

Nomura, and TD Securities.

The issue achieved wide primary market distribution with 34% of

the bonds placed in Asia, 25% in Europe, Middle East and Africa

and 41% in the Americas. By investor type, 53% of the bonds

went to central banks and official institutions, 38% to banks, and

9% to fund managers and other types of investors.

ADB plans to raise around $19 billion from the capital markets in

2015.

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, it is owned by 67 members - 48 from the

region. In 2014, ADB assistance totaled $22.9 billion, including

cofinancing of $9.2 billion.



APPENDIX 2: HIGHLIGHTS OF LOAN OPERATIONS

47

PROJECT SUMMARY:

The program will help Bangladesh continue capital market reforms

which should boost private investment and support the country’s

drive to achieve middle-income status by 2021.

The third program will strengthen the Bangladesh Securities and

Exchange Commission and support the establishment of a clearing

and settlement company. It will also support new areas such as

strengthening the Insurance Development and Regulatory Authority

to promote the insurance industry’s growth and stability, and

encourage insurers to use the capital markets more.

To improve enforcement and to boost accounting and auditing

standards, a special tribunal for capital market-related cases will be

put into operation and a financial reporting council with an

independent audit oversight function will be established, resulting in

the adoption of international accounting standards which will

enhance market confidence and encourage investment.

To increase the supply of high quality bonds and other market

instruments, policy actions will be taken to remove the 60:40 debt-to-

equity ratio ceiling that companies must adhere to, to cut the initial

public offering lock-in period for private equity investors, and to draw

up rules to promote Islamic finance, including sukuk.

The program will also spur a more liquid bond market with pilot sales

of floating-rate government bonds and by allowing primary dealers to

short sell government securities. Meanwhile, rule changes on taxes

and exchange-traded funds will seek to promote a more robust

mutual fund industry.

48

Third Capital Market Development Program

Development impact:

Enhanced capacity and size of the capital market in a strong legal and regulatory framework

Sector: Finance – Money and capital markets

Drivers of Change: Governance and capacity development Knowledge solutions Partnerships Private sector development

Project Term: 2015 – 2018

ADB Financing: $400 million

Bangladesh: Supporting Capital Market Reforms

PROJECT SUMMARY:

Roads are the dominant form of transport in the Jharkhand state, but

about 40% of the main network is in poor condition, hampering mobility

and opportunities between remote areas and industrial and economic

centers. Jharkhand has an estimated 40% of India’s mineral resources,

but it is also one of the poorest states, with over a third of its 33 million

people living below the state poverty line.

Jharkhand has set out a $2.5 billion investment plan to improve over

6,000 km of roads in 2012-2017, and ADB supported the state’s goals

with an initial loan for road improvements in 2009. The new assistance

will continue the ongoing physical upgrades, as well as building up the

capacity of the State Highways Authority of Jharkhand to design, plan,

and maintain roads, and adopt a road safety master plan. The state’s

road accident rate is sharply higher than the national average.

A number of safety and environmentally friendly features are included

in the project design, including over 60 bus stop shelters; 50 km of

raised sidewalks in urban areas; 4 km of dedicated bicycle lanes; and

solar-powered street lights. The project will also generate employment

opportunities for residents in five districts, including for women, who

will get a guaranteed share of a least 20% of jobs for afforestation work

alongside the upgraded roads.

49

Second Jharkhand State Road Project

Development impact:

State roads reconstructed or rehabilitated

Sector: Transport - Road transport (non-urban) - Transport policies and institutional development

Drivers of Change:

Governance Capacity development



India: Improving Road Links

PROJECT SUMMARY:

ADB has approved the assistance for Indonesia’s state electricity

corporation, Perusahaan Listrik Negara (PLN), to carry out major

power transmission and distribution system upgrades in Sumatra.

The assistance will help deliver sufficient and reliable electricity

supply, improving the quality of life and supporting efforts to make

the region a major industrial center.

The funds will finance enhancements to existing 150 kilovolt

transmission lines, extension of substations, and the installation of

new and upgraded equipment, including switchgears. On the

distribution side, work will be carried out to expand and reinforce the

medium-voltage and low voltage networks, including the installation

of distribution transformers, service connections, and customer

meter boxes. The program will also provide capacity building and

institutional strengthening for PLN. These improvements will help Sumatra achieve an electrification rate

of 90% by 2019 and support the overall government target of

achieving universal access to electricity by 2024, from the current

national rate of around 84%.

50

Electricity Grid Strengthening—Sumatra Program

Development impact:

Existing transmission system strengthened and expanded

Sector: Energy – Electricity transmission and distribution

Drivers of Change:

Governance and capacity development Knowledge solutions Partnerships

Private sector development



Indonesia: Sustainable Use of Electricity

PROJECT SUMMARY:

Coal has been the predominant fuel for heating in Hohhot, capital of

the Inner Mongolia Autonomous Region (IMAR) of the People’s

Republic of China (PRC). Adequate heating is a basic human need and

essential for socioeconomic activities in IMAR, an area that

experiences subzero temperatures for typically half of the year, causing

indoor and outdoor air pollution and affecting human health. The

project will reduce respiratory diseases in the local population by

designing a hybrid district heating system using low-emission natural

gas boilers and zero-emission wind-based boilers, as well as

pioneering a new business model for wind-powered district heating

sharing renewable energy subsidies.

After completion, the project will emit 60% less carbon dioxide and

82% less nitrous oxide, 98% less sulfur dioxide, and produce negligible

particulate matter compared to the existing heating system.

About 294,500 households ̶ or 30% of the city’s population ̶ will

directly benefit, along with 18 schools, 35 kindergartens, and 12

hospitals.

51

Low-Carbon District Heating Project in Hohhot in Inner Mongolia Autonomous Region

Development impact:

Improved air quality and reduced greenhouse gas emissions in Hohhot

Sector: Energy

Drivers of Change:

Knowledge solutions Partnerships



PRC: Reduced Greenhouse Gas Emissions

PROJECT SUMMARY:

The Mahaweli Water Security Investment Program will assist the

Government of Sri Lanka complete outstanding water conveyance

investments under the Mahaweli Development Program.

Completion of the program is a key priority of the government and

will maximize the productivity of Mahaweli River Basin water

resources by transferring available water to the northern dry zone

areas of Sri Lanka for irrigation, drinking, and commercial

purposes. This will accelerate local and national economic growth.

Sri Lanka has abundant water resources but with uneven water

distribution. Local communities have addressed the water stress

by constructing many small cascade systems of reservoirs,

transfer canals, and irrigation schemes, but these merely provide

supplementary irrigation to single paddy crop each year. The

storage is not even sufficient for drinking water supply.

The outputs of the program will be (i) new and improved water

conveyance and storage infrastructure constructed, (ii) systems for

improving water resource management and developed

productivity, and (iii) operational multidisciplinary investment

program management.

52

Mahaweli Water Security Investment Program

Development impact:

Improved agricultural production and sustained economic growth

Sector: Agricultural , natural resources and rural development

Drivers of Change:

Governance and capacity development

Knowledge solutions

Partnerships

Project Term: 2015 - 2024


Sri Lanka: Secured Access to Water Resources

APPENDICES 3 - 9

53

Lending Limitation: Under the policy, the total amount of disbursed loans, disbursed equity

investments, and the related prudential buffer, and the maximum amount that could be demanded

from ADB under its guarantee portfolio may not exceed the total of ADB’s unimpaired subscribed

capital, reserves, and surplus, exclusive of the special reserve.

Borrowing limitation: ADB’s borrowing policy limits ADB’s gross outstanding borrowings to no more

than the sum of callable capital of non-borrowing members, paid-in capital, and reserves (including

surplus).

Risk Bearing Capacity: ADB annually assesses its capital adequacy using a stress test methodology

that entails, among other things, estimated non-accrual shocks and their impact on ADB's capital and

income over the next 10 years. The framework provides ADB with the ability to assess its capital

adequacy based on changing portfolio risk profiles as well as on ADB's characteristics as an MDB,

including callable capital structure, preferred creditor status, and developmental mandate.

Conservative Investment Guidelines: The maximum allowable average duration of all investments

outstanding is 4 years. ADB’s investment guidelines permit only high quality instruments such as

government and government-agency debt and highly-rated corporate securities. Further, the Office of

Risk Management monitors the investment portfolio on a daily basis and ensures compliance with

prescribed limits.

For further details, please see go to http://www.adb.org/site/investors/credit-fundamentals/financial-

and-risk-management-policies

54

Appendix 3: Conservative Financial Policies

55

Approved on 20 July 2009, the new Safeguard Policy Statement reaffirms and strengthens ADB’s

commitment to ensuring that borrowers/clients meet ADB safeguard requirements to avoid,

minimize, mitigate and/or compensate adverse impacts of ADB operations on the environment

and project-affected people.

The policy commits ADB to assessing country safeguard systems, assisting borrowers/clients to

strengthen both their approaches and country capacity to manage environmental and social

risks, and to increasing ADB oversight during implementation.

As a central part of ADB's mission to promote environmentally sustainable and inclusive

economic growth, the new Safeguard Policy Statement consolidates and builds upon current ADB

policies on Environment, Indigenous Peoples and Involuntary Resettlement that are already

applied to all bank-supported projects in developing member countries (DMCs).

The policy ensures that ADB’s safeguards are harmonized with other multilateral development

banks and remain relevant to the evolving needs of DMCs and private sector clients.

The policy contains new provisions on biodiversity conservation, community health and safety,

and physical cultural resources. Key features include emphasis on capacity development of

borrowers and more attention to safeguard implementation and supervision.

The Safeguard Policy Statement became effective on 20 January 2010.

For further details, please see http://www.adb.org/site/safeguards/main

Appendix 4: Safeguard Policy Statement

56

Developing good governance and fighting corruption are core ADB strategic objectives and are crucial to effective,

transparent and accountable aid, to which ADB committed by endorsing the Paris Declaration on Aid Effectiveness.

ADB’s Office of Anticorruption and Integrity (OAI), an independent body since October 2009, is the initial point of contact

for allegations of integrity violations involving ADB-related activities or ADB staff. Its mission is to ensure ADB and its

partners maintain the highest ethical and professional standards, and prevent resources intended to improve the lives of

the poor from being used to line the pockets of the unscrupulous.

Any party found to have committed fraudulent, corrupt, coercive, collusive, obstructive practices, or other integrity

violations identified by ADB risks being sanctioned with debarment. Debarred entities are ineligible to participate in

ADB-financed, administered or supported activities. A debarred firm’s ineligibility extends to all employees and officers

of a firm, and may extend to other principals and contractual employees of the firm. Debarred individuals may not

participate in ADB-related activity, as individuals or through nomination by an eligible firm, unless they have completely

disassociated themselves with an ineligible firm.

Following the Harmonized Framework adopted by MDBs in 2006, the Agreement on Cross-Debarment was signed by

ADB, the World Bank Group, the African Development Bank (AfDB), the Inter-American Development Bank (IADB) and

the European Bank for Reconstruction and Development (EBRD) in Luxembourg on 9 April 2010. An important global

milestone in the fight against corruption, this Agreement allows that an entity debarred by one of the participating MDBs

be subsequently cross-debarred by the other participating MDBs, and constitutes an important step in strengthening

global anticorruption efforts.

The base sanction for integrity violations is 3-year debarment. The Integrity Oversight Committee (IOC) may impose a

greater or lesser debarment period depending on the circumstances of each case. The IOC will be guided by the

following ranges: 1) First debarments (including cases where a party has previously been given a reprimand) – 1 year to

indefinite for individuals and 1 to 7 years for firms, 2) Second debarments – up to indefinite for individuals and up to 10

years for firms, 3) Subsequent debarments – up to indefinite for individuals and up to 20 years for firms.

In accordance with ADB’s Anticorruption Policy, ADB’s zero tolerance to corruption is linked to broader support for

governance and improvement in the quality and capacities of developing member countries (DMCs), with fraud and

corruption detection training given to government agencies in several of these DMCs.

ADB also organizes knowledge support activities to improve integrity awareness and skills. Since 2010 it is mandatory

for all ADB staff to be briefed on the importance of fighting corruption and adherence to ADB’s Anticorruption Policy.

For further details, please see http://www.adb.org/site/integrity/main

Appendix 5: Anticorruption and Integrity Policies

57

The Investment Climate Facilitation Fund (ICFF) was established by the Government of Japan (GOJ) and the

Asian Development Bank (ADB) in 2008 as a trust fund under the Regional Cooperation and Integration

Financing Partnership Facility (RCIFPF) of ADB.

The objective of ICFF is to promote investments in ADB’s developing member countries (DMCs) and facilitate

regional cooperation and integration (RCI) through the construction of basic infrastructure, improvements in

the investment climate, capacity building, and promotion of good governance, among others.

Activities to be supported by ICFF are projects that:

a. require collective efforts and actions of two or more countries to jointly respond to cross-border issues;

b. are national in nature, but with significant regional dimensions and/or implications;

c. facilitate regional policy dialogue, including the establishment of regional policies for greater RCI;

d. support research and promote knowledge generation and dissemination among DMCs in the area of

RCI;

e. strengthen institutional capacity of regional and/or subregional groupings; or

f. support regional partnership building with international institutions.

All ADB DMCs are eligible for support from ICFF. Funding priority will be given to projects that promote

financial sector development and regional investment. Likewise, projects which will promote the visibility of

ICFF as well as those which will be implemented in cooperation with Japanese aid agencies will be prioritized.

ADB has been appointed by GOJ as the administrator of ICFF.

Project implementation, supervision, and monitoring are conducted by the concerned departments and

offices following ADB’s standard policies, procedures, and guidelines, including consulting services and

procurement, social and environmental safeguards, financial management and reporting, and anticorruption

and governance, as amended from time to time.

Total funds committed amounted to approximately $31.5 million as of 31 March 2016.

Appendix 6: Investment Climate Facilitation Fund

58

Appendix 7: Midterm Review of Strategy 2020 ADB’s Strategic Priorities for 2014 – 2020:

A. Sharpening ADB’s Operational Focus 1. Poverty reduction and inclusive economic growth

2. Environment and climate change

3. Regional cooperation and integration

4. Infrastructure development

B. Responding to the New Business Environment 5. Middle-income countries

6. Private sector development and operations

7. Knowledge solutions

C. Strengthening ADB’s Capacity and Effectiveness 8. Financial resources and partnerships

9. Delivering value for money in ADB

10.Organizing to meet new challenges

59

REGIONAL MEMBERS RatingYear of

MembershipRating

Year of

Membership

Afghanistan NR/NR 1966 Micronesia, Fed. States of NR/NR 1990

Armenia B1/NR 2005 Mongolia B2/B 1991

Australia Aaa/AAA 1966 Myanmar NR/NR 1973

Azerbaijan Ba1/BB+ 1999 Nauru NR/NR 1991

Bangladesh Ba3/BB- 1973 Nepal NR/NR 1966

Bhutan NR/NR 1982 New Zealand Aaa/AA 1966

Brunei Darussalam NR/NR 2006 Pakistan B3/B- 1966

Cambodia B2/NR 1966 Palau NR/NR 2003

People's Republic of China Aa3/AA- 1986 Papua New Guinea B2/B+ 1971

Cook Islands NR/B+ 1976 Philippines Baa2/BBB 1966

Fiji B1/B+ 1970 Samoa NR/NR 1966

Georgia Ba3/BB- 2007 Singapore Aaa/AAA 1966

Hong Kong, China Aa1/AAA 1969 Solomon Islands NR/NR 1973

India Baa3/BBB- 1966 Sri Lanka B1/B+ 1966

Indonesia Baa3/BB+ 1966 Taipei,China Aa3/AA- 1966

Japan A1/A+ 1966 Tajikistan NR/NR 1998

Kazakhstan Baa3/BBB- 1994 Thailand Baa1/BBB+ 1966

Kiribati NR/NR 1974 Timor-Leste NR/NR 2002

Republic of Korea Aa2/AA- 1966 Tonga NR/NR 1972

Kyrgyz Republic NR/NR 1994 Turkmenistan WR/NR 2000

Lao People's Democratic Republic NR/NR 1966 Tuvalu NR/NR 1993

Malaysia A3/A- 1966 Uzbekistan NR/NR 1995

Republic of the Maldives NR/NR 1978 Vanuatu NR/NR 1981

Marshall Islands NR/NR 1990 Viet Nam B1/BB- 1966

NON-REGIONAL

MEMBERSRating

Year of

Membership

Austria Aa1/AA+ 1966

Belgium Aa3/AA 1966

Canada Aaa/AAA 1966

Denmark Aaa/AAA 1966

Finland Aa1/AA+ 1966

France Aa2/AA 1970

Germany Aaa/AAA 1966

Ireland A3/A+ 2006

Italy Baa2/BBB- 1966

Luxembourg Aaa/AAA 2003

The Netherlands Aaa/AAA 1966

Norway Aaa/AAA 1966

Portugal Ba1/BB+ 2002

Spain Baa2/BBB+ 1986

Sweden Aaa/AAA 1966

Switzerland Aaa/AAA 1967

Turkey Baa3/BB 1991

United Kingdom Aa1/AA 1966

United States Aaa/AA+ 1966

Note: Moody’s and Standard & Poor’s ratings are as of 28 July 2016. (Source: Bloomberg)

Appendix 8: ADB’s Shareholders – 31 December 2015

ADB website www.adb.org

Investor website www.adb.org/site/investors/main

Strategy 2020 www.adb.org/about/policies-and-strategies

Country Operations www.adb.org/countries/main

Annual Reports www.adb.org/documents/series/adb-annual-reports

Funds and Resources www.adb.org/site/funds/main

Sectors and Themes www.adb.org/focus-areas

Data and Research www.adb.org/data/main

Asian Bonds Monitor asianbondsonline.adb.org

News and Events www.adb.org/news

Bloomberg ADB <GO>

60

Appendix 9: Sources of Additional Information

Every effort has been made to ensure the accuracy of the data used in this publication. Variations in data in the

Asian Development Bank (ADB) publications often result from different publication dates, although differences

may also come from source and interpretation of data. ADB accepts no responsibility from any consequence of

their use.

This presentation is for informational purposes only and does not constitute an offer to sell or solicitation of an

offer to buy any ADB securities in any jurisdiction to any person to whom it is unlawful to make such an offer or

solicitation.

- The term “country”, as used in the context of ADB, refers to a member of ADB and does not imply any

view on the part of ADB as to the member’s sovereignty or independent status.

- In this publication, $ refer to US dollars.

61

Disclaimer


Treasury Department

Funding Division

6 ADB Avenue, Mandaluyong City

1550 Metro Manila, Philippines

Email [email protected]

Investor Website www.adb.org/site/investors/main

Bloomberg ADB <GO>

Tel. No. +632 683-1204

Fax No. +632 632-4120

Asian Development Bank Fighting Poverty in Asia and the Pacific

All images are from the ADB Photo Library.

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