AfDB makes successful showing in USD 1 billion bond deal

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Last week, the African Development Bank successfully issued a USD1 billion, five-year bond. Order books totalled USD1.2 billion from 43 investors.

Final distribution figures underscored AfDB's strong penetration across different regions. The order book was well diversified geographically. Asian investors came in as the largest buyers at 44 percent of the bond. European and American investors bought 18 percent, while African and Middle East investors bought 15 percent and 5 percent, respectively.

The 43 accounts included high quality orders from central banks and official institutions, which bought 68 percent of the deal, while banks bought 17 percent and asset managers 15 percent.

This result is all the more noteworthy against the background of the global financial crisis.

The notes pay a coupon of 1.125 percent and are the first USD global benchmark issue of AFDB for 2012. In 2011, the bank issued two five-year USD global benchmarks.

The lead managers of the bond are Daiwa Capital Markets, Goldman Sachs International, HSBC, J.P. Morgan. The bond matures in just over five years on 15 March 2017.

AfDB is a triple-A rated institution by the international ratings agencies Moodys, Fitch and Standard &Poor’s. The USD 1 billion successful bond issue underscores the bank’s credibility as an international financial institution.

AfDB announced on Tuesday 10 January that banks had been mandated for a new five-year USD global benchmark transaction to be launched in the near future, subject to market conditions. The decision was taken early the next day, Wednesday 11 January to proceed with a transaction to price intraday.

Transaction activity grew rapidly, with the orderbook soon reaching over USD 900 million. Given AfDB's strong liquidity position, the deal size was capped at a maximum of USD 1 billion from the outset. The decision was thus taken to close the orderbook at 4pm London time when it reached USD 1.2 billion with over 40 orders.

AfDB Group Treasurer Pierre Van Peteghem said of the deal: “The transaction again highlights the strong support African Development Bank enjoys from the investor community for its development mandate in Africa. The strong participation both from central banks and asset managers is a testimony to the strong shareholder support and sound financial management that underpins the Bank’s top notch credit ratings.