As part of activities to mark its diamond jubilee anniversary, the African Development Bank, on Thursday announced plans for a new five-year US$2bn bond under its Sustainable Bond framework.
The fixed rate social global benchmark bond with coupon rate of 3.5% which matures on September 18, 2029, marks AfDB’s second USD Global Benchmark in 2024, which follows the three-year US$2bn social benchmark transaction issued in January.
The bond which coincides with the 60th anniversary of the founding of the AfDB, and was launched on Tuesday September 10, has a re-offer yield of 3.574% and a re-offer price of 99.664%.
According to a statement by the group, the new transaction brings an on-the-run reference point in the 5-year part of the USD curve, extending AfDB’s outstanding curve, and demonstrating the issuer’s commitment to maintain liquid lines at key benchmark maturities.
With the final order book closing in excess of US$3.7bn, including a US$150m of Joint Lead Managers (JLMs) interest, and 66 investors participating, the success of the 5-year transaction, the group continued, is a clear vote of confidence from investors in AfDB’s AAA credit.
Moreso, it noted that the strong participation from ESG investors representing 25% of the final order book also highlights investors’ confidence in the AfDB’s Sustainable Bond Framework and development mandate.
The African Development Bank’s mandate for a new 5-year USD Social Benchmark was announced on Monday 9th September 2024, with the Initial Pricing Thoughts (IPTs) released thereafter at 12:53 UKT at SOFR Midswaps + 42 basis points (bps) area.
Investor demand was strong from the outset as Indications of Interest (IoIs) from AfDB’s high quality investor base accumulated at a rapid pace, exceeding US$2.5bn (including USD 150 million JLM interest) overnight. Books officially opened the following morning, on Tuesday 10th September at 8:01 UKT, with price guidance tightening by 1bp to SOFR Midswaps + 41bps area.
The order book continued to grow throughout the morning, with investor demand approaching USD 3.3 billion (including USD 150 million JLM interest) by 10:19 UKT, and the issuer set the spread at SOFR Midswaps + 41bps.
At 13:52 UKT, the quality of the order book allowed the issuer to set the size at USD 2 billion, as the final order book closed in excess of USD 3.7 billion (including USD 150 million JLM interest). At 15:58 UKT, the transaction officially priced at SOFR Midswaps + 41bps, equivalent to a reoffer yield of 3.574% and a spread of 11.27bps vs the on-the-run 5-year US Treasury (UST 3.625% Aug-29).
According to the investor distribution statistics, the geographical distribution highlights a diversified investor base with Americas (47%), followed by Europe, Middle East and Africa (EMEA) (32%) and Asia (21%).
In terms of investor type, the high-quality order book was predominantly allocated to Central Banks & Official Institutions (56%), Bank Treasuries (29%) and Fund Managers/Asset Managers/Hedge Funds (15%), it added.
