African Development Bank has raised exceptional $3bn in a three-year bond to help alleviate the economic and social impact the Coronavirus Disease will have on livelihoods and economies in Africa.
The ‘Fight Covid-19’ social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including socially responsible investors, with bids exceeding $4.6bn.
This is the largest social bond ever launched in international capital markets, and the largest Unites States dollar benchmark ever issued by the bank. It will pay an interest rate of 0.75 per cent.
The AfDB Group is moving 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.
“These are critical times for Africa as it addresses the challenges resulting from COVID-19. The AfDB is taking bold measures to support African countries. This $3bn COVID-19 bond issuance 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,” said the President of AfBD Group, Akinwumi
Adesina.
The order book for this record-breaking bond highlights the scale of investor support, which the AfDB enjoys, said the arrangers.
“As the COVID-19 outbreak is dangerously threatening Africa, the AfDB 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 Head of Sustainable Banking, Crédit Agricole Corporate and Investment Bank, Tanguy Claquin.
COVID-19 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 already fragile health systems.
It is estimated that the continent will require several billions of dollars to cushion the impact of the disease, as many countries scrambled 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 towards recession.
Commenting on the landmark transaction, Executive Director, SSA Syndicate at Goldman Sachs, George Sager, said, “In a time of unprecedented market volatility, the AfDB has been able to brave the capital markets to secure invaluable funding to help the efforts of the continent’s fight against
COVID-19. Not only that, but in the process, delivering their largest ever U.S. dollar benchmark. A truly remarkable outcome, both in terms of its purpose dollar financing.”
The bank established its Social Bond framework in 2017 and raised the equivalent of $2bn through issuances denominated in euro and Norwegian krone. In 2018, it was designated by financial markets the ‘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 AfDB moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained.
“Our social bond programme 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 Treasurer of AfDB, Hassatou Diop N’Sele.
Fight COVID-19 was allocated to central banks and official institutions (53 per cent), bank treasuries (27 per cent) and asset managers (20 per cent).
Final bond distribution statistics were as follows: Europe (37 per cent), Americas (36 per cent), Asia (17 per cent) Africa (eight per cent) and Middle-East (one per cent).
