African Development Bank raises $2 billion in Bonds as it celebrates Diamond Jubilee

The African Development Bank (AfDB) has successfully launched and priced a new $2 billion five-year Social Benchmark bond, maturing on September 18, 2029.

This issuance coincides with the bank’s 60th anniversary and marks its second USD Global Benchmark for 2024 following the 3-year USD 2 billion social benchmark transaction issued in January.

The bond features a fixed coupon of 3.500%, paid semi-annually on a 30/360 basis. The re-offer price was set at 99.664%, with a re-offer yield of 3.574%.

The transaction, issued in a social bond format under the AfDB’s Sustainable Bond framework, extends the bank’s curve in the 5-year USD segment and demonstrates its commitment to maintaining liquid lines at key benchmark maturities.

With the final order book closing in excess of $3.7bn, and 66 investors participating, the success of this transaction is a clear indication of investors’ confidence in AfDB’s AAA credit.

The bond’s issuance saw significant participation from ESG investors, representing 25% of the final order book, highlighting investors’ confidence in the bank’s development mandate.

The geographical distribution of investors was diverse, with 47% from the Americas, 32% from Europe, Middle East, and Africa, and 21% from Asia.

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%).

The African Development Bank’s funding desk announced the mandate for the new five-year Social Benchmark on September 9, 2024, with Initial Pricing Thoughts released shortly after. Investor interest accumulated rapidly, with indications of interest exceeding $2.5 billion overnight.

The books officially opened the following morning, with price guidance tightening to SOFR Midswaps + 41bps. By 10:19 UKT on September 10, demand had reached $3.3 billion, prompting the issuer to set the spread at SOFR Midswaps + 41bps.

The final size was set at $2 billion, with the transaction officially priced at SOFR Midswaps + 41bps, equivalent to a re-offer yield of 3.574%.