AfDB Launches EUR 1.25 Billion Social Bond

By Tolulope Oke

The African Development Bank (AfDB) has initiated a 7-year, EUR 1.25 billion Global Benchmark Social Bond transaction.

The bond has a 2.250% coupon and a 2.310% re-offer yield, and will be commence on the 14th of September.

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”

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.”

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The qualified projects that will be sponsored with the proceeds of this new Social Bond with a EUR value are expected to lower poverty, create jobs, and support inclusive growth across age, gender, and geography, ultimately enhancing the standard of living for Africans, according to the announcement.

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.