Banking industry sources said ADB is now in the market for underwriters or issue managers to handle its zeroes, proceeds of which will again be used for re-lending.

"ADB is looking at a seven-year zeroes," sources said, adding that the amount is still a working figure.

A source claimed ADB has already short-listed its underwriters. "BDO (referring to Banco de Oro Universal Bank) and HSBC are among those in the list."

The possible return to the domestic market of ADB is apparently in fulfillment of its pledge return for additional issues in the future, depending on demand market and conditions.

According to another source, the multilateral agency will be at an advantage in floating zeroes as opposed to fixed rate debt notes with bullet maturity since there is no need for the issuer to payment a monthly or a quarterly or even semi-annual coupon payment.

"There is a coupon payment schedule for fixedrate issues. For zeroes, there is no cash flow payment due to the very nature of the instrument," a market player stressed.

This is because a holder of zero coupon bonds will not earn an interest periodically but, instead, will get the total amount of his exposure plus the accrued interest at the maturity of the debt instrument, which he at a discount.

This type of investible instrument is particularly suited for insuranace and pre-need firms that need to hedge or re-investment risk, thereby, avoiding any shortfall for its future payments.

Zero coupons could be paralleled to treasury bills, which banks and financial institutions buy at discount in the primary market.