AfDB Launches $2bn in New Social Bond Issue
The African Development Bank (AfDB) has announced the successful launch and pricing of a new $2bn five-year social benchmark bond, which is set to mature on September 18, 2029.
A social benchmark bond is a type of bond issued specifically to raise funds for social projects and initiatives.
According to the bank, this issuance coincides with its 60th anniversary. The bond, which was launched on September 10, 2024, features a coupon of 3.500 per cent, with a re-offer yield of 3.574 per cent and a re-offer price of 99.664 per cent.
The AfDB said in a Thursday statement that this five-year transaction, issued under its Sustainable Bond framework, represents the bank’s second USD Global Benchmark for 2024, following a similar issuance in January.
The new bond extends the AfDB’s curve in the five-year USD segment and reinforces the issuer’s commitment to maintaining liquid lines at key benchmark maturities.
“With the final order book closing in excess of $3.7bn (including $150m of Joint Lead Managers interest), and 66 investors participating, the success of this five-year transaction is a clear vote of confidence from investors in AfDB’s AAA credit.
“The strong participation from ESG investors representing 25 per cent of the final order book also highlights investors’ confidence in the Bank’s Sustainable Bond Framework and development mandate,” AfDB stated.
The AfDB announced the mandate for the new five-year Social Benchmark on September 9, 2024, at 09:40 UKT, with Initial Pricing Thoughts released shortly after at SOFR Midswaps + 42 basis points.
Investor interest accumulated rapidly, with indications of interest exceeding $2.5bn overnight. The books officially opened the following morning, on September 10 at 8:01 UKT, with price guidance tightening to SOFR Midswaps + 41bps.
The bank further explained that by 10:19 UKT on September 10, demand had reached $3.3bn, prompting the issuer to set the spread at SOFR Midswaps + 41bps.
By 13:52 UKT, the final size was set at $2bn, with the transaction officially priced at SOFR Midswaps + 41bps, equivalent to a reoffer yield of 3.574 per cent. The spread was noted to be 11.27 basis points over the on-the-run five-year US Treasury, the bank stated.
