Investors Swoop In On $3bn AfDB ‘Fight COVID-19’ Social Bond

Investors Swoop In On $3bn AfDB ‘Fight COVID-19’ Social Bond


Post Views: 201 The African Development Bank (AfDB), on Friday in Abidjan, Cote d’Ivoire, said it raised “an exceptional” $3bn bond to help alleviate ...

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The African Development Bank (AfDB), on Friday in Abidjan, Cote d’Ivoire, said it raised “an exceptional” $3bn bond to help alleviate the economic and social impact of the Coronavirus (Covid-19) pandemic on Africa’s economies and livelihoods.
The ‘Fight Covid-19’ social bond has a three-year maturity and attracted interests from central banks and official institutions, bank treasuries, and asset managers, including what it described in a statement as “Socially Responsible Investors.”
The bond, the largest Social Bond ever launched in international capital markets to date, and the largest US$ benchmark ever issued by the bank, recorded bids in excess of $4.6bn and will pay an interest rate of 0.75%.
The African Development Bank Group, the statement continued, hopes to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.
According to Dr. Akinwumi Adesina, AfDB’s President, “these are critical times for Africa as it addresses the challenges resulting from the Coronavirus.
“The African Development Bank is taking bold measures to support African countries,” he added.
This $3bn Covid-19 bond issuance, he continued, “is the first part of our comprehensive response that will soon be announced. This is indeed the largest social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries.”
The order book for the record-breaking bond, the arrangers explained, highlights the scale of investor support, which the African Development Bank enjoys.
“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services, and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.
Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on the continent’s already fragile health systems.
It is estimated that the continent will require billions of US$ to cushion the impact of the disease, as many countries adopted contingency measures, including commercial lockdowns in desperate efforts to contain it.
Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession.
Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African continent’s fight against Covid-19. Not only that but in the process, delivering their largest ever USD benchmark. (It’s) truly remarkable outcome both in terms of its purpose, but also in terms of a USD financing.”
The AfDB established its Social Bond framework in 2017 and raised the equivalent of $2bn through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.
“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.
Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%).
Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).