African Development Bank Launches USD 2 Billion 3.500% Fixed Rate Social Global Benchmark due 18 September 2029 as it marks its Diamond Jubilee

 

The African Development Bank (“AfDB”) (www.AfDB.org), rated Aaa (Moody’s) / AAA (S&P) / AAA (Fitch) / AAA (Japan Credit Rating), has launched and priced a new USD 2 billion 5-year Social Benchmark transaction due 18 September 2029, coinciding with the 60th anniversary of the founding of the AfDB. The bond was launched on Tuesday 10 September and pays a coupon of 3.500% with a re-offer yield of 3.574% and a reoffer price of 99.664%.

The new 5-year USD transaction, issued in a social bond format under the Bank’s Sustainable Bond framework, marks AfDB’s second USD Global Benchmark in 2024 following the 3-year USD 2 billion social benchmark transaction issued in January.

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 USD 3.7 billion (including USD 150 million of Joint Lead Managers (JLMs) interest), and 66 investors participating, the success of this 5-year transaction is a clear vote of confidence from investors in AfDB’s AAA credit. The strong participation from ESG investors representing 25% of the final order book also highlights investors’ confidence in the Bank’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 at 09:40 UKT. Initial Pricing Thoughts (IPTs) were 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 USD 2.5 billion (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).

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%).

Bond Summary Terms

Issuer:

African Development Bank (“AfDB”)

Issuer rating:

Aaa / AAA / AAA (Moody’s / S&P / Fitch)

Amount:

USD 2 billion

Pricing date:

10 September 2024

Settlement date:

18 September 2024 (T+6)

Coupon:

3.500%, Fixed, semi-annual 30/360

Maturity date:

18 September 2029

Re-offer price:

99.664%

Re-offer yield:

3.574% annual

Re-offer spread:

SOFR MS + 41bps / UST 3.625% Aug-29 + 11.27bps

Joint Lead-Managers:

BofA Securities, BMO Capital Markets, Citi, Goldman Sachs International and Morgan Stanley

 ISIN:

US00828EFD67

Distributed by APO Group on behalf of African Development Bank Group (AfDB).

Contact:
fundingdesk@afdb.org

About the African Development Bank Group:
The African Development Bank Group is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 41 African countries with an external office in Japan, the Bank contributes to the economic development and the social progress of its 54 regional member states. For more information: www.AfDB.org