The African Development Bank (AfDB) has launched and priced a new €1.25 billion seven-year Global Benchmark transaction, in a Social Bond format, due September 14, 2029.
The AfDB in in a statement posted on its on Friday, stated the bond launched on Wednesday, “pays a coupon of 2.250 per cent with a re-offer yield of 2.310 per cent.”
The new seven-year EUR transaction marks the bank’s second EUR Global Benchmark in 2022, following the one billion euros five-year transaction issued in March, extending further the bank’s EUR curve.
Additionally, the new line brings a new liquid and on-the-run reference point in the seven-year part of AfDB’s EUR curve, refreshing a key benchmark maturity, which the bank last visited in 2017.
“By issuing social bonds to finance socio-economic development in its regional member countries, the bank is advancing its mission and strategy – to spur sustainable economic development and social progress in Africa – and is capitalising on its strong track-record of financing projects with strong social impact on the continent.
“The eligible projects to be financed with the proceeds of this new EUR-denominated Social Bond are expected to lead to poverty reduction and job creation, as well as inclusive growth across age, gender and geography, thus improving the quality of life for the people of Africa,” the statement noted.
It said the AfDB’s mandate for a new seven-year EUR-denominated Global SEC-Exempt Benchmark was announced on September 6, at 13:00 London time, with the issuer seizing the final clear window available in the euro market before the European Central Bank’s (ECB) September meeting on Thursday.
Books officially opened the following morning, on September 7, at 8:00 London time with Initial Price Thoughts released at mid-swaps – 2bps (basis points) area.
Investor demand was robust from the outset with the order book growing in excess of €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 the bank’s EUR curve.
Investor interest, however, continued to grow with the book closing in excess of €2.3 billion with 71 investors participating in the offering whilst the quality of the book firmly supported the launch of a €1.25 billion transaction.
Notably, at €2.3 billion, the deal’s order book represents AfDB’s largest ever book for a EUR benchmark transaction.
Shortly thereafter at 14:10 London time, the transaction officially priced at mid-swaps -3bps, equivalent to a reoffer yield of 2.310 per cent and a spread of 96.4bps vs. the DBR (Debt Burden Ratio) 0.00 per cent August 2029 benchmark.
The distribution statistics are as follows: The geographical distribution highlights a diversified investor base approximately with the majority of the book from Europe (56.7 per cent), followed by the UK (22.6 per cent), Asia (12.1 per cent), Americas (8.2 per cent) and Africa (0.4 per cent).
In terms of investor type, the high quality order book was predominantly allocated to banks (40.2 per cent) and Central Banks/Official Institutions (30 per cent) and whilst Asset Managers/Insurance/ Pension Funds (29.8 per cent), rounded off the remainder of allocations.
Bond Summary Terms are as follows: Issuer is the AfDB with Issuer Rating as Aaa/AAA / AAA /AAA (All Stable).
Size (of bond) €1.25 billion and the Pricing Date as of September 7, 2022; Settlement Date of September 14, 2022; and Maturity Date of September 14, 2029.
A Coupon of 2.250 per cent, Spread to mid-swaps of -3 basis points, Spread to benchmark of +96.4 basis points, re-offer price of 99.616 per cent and a re-offer yield of 2.310 per cent.
The Lead Managers are Barclays, Citi, JP Morgan and Société Générale and the International Securities Identification Number is XS2532472235.
