AfDB Issues EUR 1.25 Billion 7-Year Global Benchmark Social Bond

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The African Development Bank (“AfDB”) has launched a EUR 1.25 billion 7-year Global Benchmark transaction, in a Social Bond format, due 14 September 2022. The bond pays a coupon of 2.250% with a re-offer yield of 2.310%.

This was disclosed by the African Development Bank’s website in a press release titled “ The African Development Bank issues EUR 1.25 billion 2.25% 7-year Global Benchmark Social Bond due 14 September 2029”

After the EUR 1 billion 5-year transaction announced in March, the new 7-year EUR transaction represents the African Development Bank’s second EUR Global Benchmark in 2022, expanding the EUR curve of the Bank. The Bank of capitalizing on its strong track record of financing projects with significant social impact on the continent.

The report said, “On Wednesday 7th September 2022, the African Development Bank (“AfDB”), rated Aaa (Moody’s) / AAA (S&P) / AAA (Fitch) / AAA (Japan Credit Rating), launched and priced a new EUR 1.25 billion 7-year Global Benchmark transaction, in a Social Bond format, due 14 September 2022. The bond pays a coupon of 2.250% with a re-offer yield of 2.310%.”
“Books officially opened the following morning, on Wednesday 7th September 2022, at 8:00 London time with Initial Price Thoughts released at mid-swaps – 2bps area. Investor demand was robust from the outset with the orderbook growing in excess of EUR 1.8 billion by 9:35 London time, supporting AfDB’s move to set the spread tighter at mid-swaps – 3bps with books to go subject at 10:30 London time. The final mid-swap spread implied a new issue concession of 2bps relative to AfDB’s EUR curve” the report added.

The fund would help AfDB to promote sustainable economic development and social progress in Africa by issuing social bonds to finance socio-economic development in its regional member countries.

According to the release the qualified projects that will be funded with the revenues of this new Social Bond denominated in EUR are anticipated to reduce poverty, create jobs, and promote inclusive growth across age, gender, and location, ultimately raising the standard of living for Africans.

The Bank said, “Investor interest continued to grow with the book closing in excess of EUR 2.3 billion with 71 investors participating in the offering whilst the quality of the book firmly supported the launch of a EUR 1.25 billion transaction. Notably, at EUR 2.3 billion, the deal’s orderbook represents AfDB’s largest ever book for a EUR benchmark transaction.”

“The geographical distribution highlights a diversified investor base approximately with the majority of the book from Europe (56.7%), followed by the UK (22.6%), Asia (12.1%), Americas (8.2%) and Africa (0.4%)” the bank added.

In terms of investor type, the high-quality orderbook was predominantly allocated to Banks (40.2%) and Central Banks/Official Institutions (30%) and whilst Asset Managers / Insurance / Pens (29.8%), rounded off the remainder of allocations.