AfDB Announces Launch of $2 Billion Social Bond Under Its New Framework

AfDB Announces Launch of $2 Billion Social Bond Under Its New Framework

Ugo Aliogo

The African Development Bank (AfDB) yesterday announced that it had launched and priced a $2 billion three-year Social Global Benchmark, its first social bond issued under its new sustainable bond framework established in September 2023.

In a statement, the bank said the bond is due February 25, 2027, noting that the programme seamlessly consolidates and enhances its existing green and social bond programme, facilitating the issuance of green bonds, social bonds, and sustainability bonds.

The statement also said the new three-year social benchmark is the bank’s first global benchmark of the year, strategically aligning with the robust reopening of primary markets in January 2024.

The statement also stated that the issuance was a significant highlight amid a dynamic week in the sub-Saharan Africa markets, witnessing the launch of eight benchmarks totalling $17.25 billion within a span of two days.

The statement further explained that with the transaction, the bank continues to carry out its funding strategy of issuing large liquid benchmark transactions and adds another on-the-run reference in the three-year maturity.

“The issuance received strong support from the global investor community, with an order book in excess of $3.5 billion and attracted high-quality investors, including central banks, official institutions, and bank treasuries, constituting 78 per cent of the book.

 “Distribution was well diversified across geographies and investor profiles, with 76 orders in the book. The social label garnered interest from Environment , Social and Governance (ESG) investors, representing 38 per cent of participants in the book,” it added.

According to the bank, the deal enjoyed good investor demand during the overnight session with Indications of Interest (IoIs) reaching $2.1 billion by the time books officially opened on Thursday 18 January at 08:00 London time.

“The order book continued to grow throughout the European morning, with investor demand reaching $3.6 billion by 10:50 London time, which allowed the spread to be tightened by 2bps and set at SOFR mid-swaps plus 31bps.

“Books closed at 13:00 London time, and the high quality of the order book, which was in excess of $3.5 billion, allowed for the launch of the transaction with a size of $2 billion.

“The trade officially priced at 15:18 London time with a reoffer yield of 4.221 per cent, equivalent to a spread of 10.3bps vs UST 4 percent Jan-27, the tightest print vs UST in the USD SSA primary market so far this year. The final order book closed in excess of $3.5 billion with more than 70 orders,” it added.

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