The African Export-Import Bank (Afreximbank) has successfully closed a $1.3 billion dual tenor bond issuance, its largest-ever transaction in the international debt capital markets.
The bank announced this in a statement in Cairo, Egypt on Tuesday.
It said that it printed a $600 million five-year note at a spread of T+185 basis points (bps) and a $700 million 10-year note at a spread of T+220bps.
The bank explained that this was after achieving a final order book of $4.5 billion.
It said “The Initial Pricing Thoughts (IPTS) were announced at T+220bps area and T+250bps area for the five-year and 10-year tranches, respectively.
“Backed by strong demand, the combined books peaked at five billion dollars, with a slight skew towards the five-year tranche, seeing pricing set at T+185bps to a re-offer yield of 2.634 per cent and T+220bps to a re-offer yield of 3.798 per cent respectively.
“The 10-year tranche was finally priced at only a five bps New Issue Premium (NIP), while the five year was priced flat to fair value.”
According to the statement, Afreximbank Advisory and Capital Markets (ACMA) acted as Sole Financial Advisors on the transaction.
Also, Afreximbank partners in arranging the transaction were Hongkong and Shangai Banking Corporation (HSBC) plc as Sole Coordinator and Joint Lead Manager/Book Runner.
It also had Mitsubishi UFJ Financial Group (MUFG), Emirates NBD Bank PJSC, Commerzbank and Standard Chartered Bank as Joint Lead Managers and Book Runners.
It added that the transaction was a major milestone for Afreximbank, marking the second time that the bank had accessed the 144A US market and was the bank’s largest transaction in the debt capital markets to date.
The bank said that it fulfilled a number of key objectives of its Liability Management strategy, which included diversification of the liability book by geography, investor type and tenor as well as reducing cost of funds.
The statement said that prior to pricing the transaction, Afreximbank met with both new and existing investors during well-attended virtual roadshows covering Africa, Gulf countries, Europe, Asia and USA.
It also received overwhelmingly strong feedback, noting confidence in Afreximbank’s credit profile and strategy.
Investors also complimented the bank for helping its member countries adjust to the shocks caused by the COVID-19 pandemic, through its Pandemic Trade Impact Facility (PATIMFA), it stated.
Speaking after the closing, Mr Denys Denya, Afreximbank’s Executive Vice President responsible for Treasury, said the landmark deal confirms continuing investor deep confidence in Afreximbank’s mission and credit story.
“It also confirms that achieving competitive pricing for both tranches was testament to the strength of support from investors from all key financial markets across the globe.
“Importantly, the success of this transaction enables the bank to continue to play a major role in the development of intra-African trade and trade between Africa and the rest of the world.
“The closing of the transaction is evidence of the bank’s growing capability to harness competitively priced long dated resources into Africa and fund investments that would have a positive impact on trade in the continent, ” it said.
Afreximbank is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade.
