Launching and pricing its first sustainable dollar-denominated 750 million permanent subordinated hybrid capital notes, the African Development Bank (AfDB) did so with success.
The bank stated in a statement that the transaction, which was sealed on January 30, was launched with a coupon of 5.75 percent until August 2034, with an optional first-call date of 10.5 years, at the discretion of AfDB.
The bank was able to obtain an extremely fine-grained order book with more than 275 investors and more than 190 allocations. With a peak order book of more than $6 billion, investor demand remained positive.
Hedge/specialist funds received the largest portion of the allocation (54.8%), followed by asset managers (27.8%). Pension funds and insurance received 6.6% of the total, while central banks and other public organizations received 6.7%.
The demand was primarily from the United Kingdom (51.1%), then Europe, the Middle East, and Africa (26.5%), Asia (14%), and America (8.4%).
As the first multilateral development bank to issue bonds of this kind, the African Development Bank (AfDB) took the lead in optimizing its balance sheet in accordance with the recommendations of the G20 Capital Adequacy Framework (CAF) to increase lending capacity. An inventive kind of capital that boosts the potential for sustainable financing is hybrid capital.
To lead and manage its new perpetual non-call (PerpNC) 10.5-year inaugural USD Global SEC-exempt sustainable hybrid transaction, the bank appointed Barclays, BNP Paris, BofA Securities, and Goldman Sachs International as joint book runners. BNP Paribas and Goldman Sachs International were also designated as joint structuring agents.
With this transaction on Monday, the pan-African lender celebrated ten years of issuing bonds in the environmental, social, and governance (ESG) arena. The notes will be leveraged through new green or social bonds and will be issued in a sustainable bond structure in accordance with the bank’s 2023 Sustainable Bond Framework.
The sustainable hybrid capital, a recent addition to the AfDB’s capital base, will enable more lending capacity to support social and/or environmental projects.
The first green bond issued by the regional bank was placed on the Luxembourg Stock Exchange (LuxSE) in 2013. Since 2017, it has been issuing social bonds.
