AfDB Makes Aus $500 million Note

19/03/2012
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The African Development Bank (“AfDB”) rated (Aaa/AAA) today priced a new benchmark Australian Dollar transaction, marking the return of AfDB to the Kangaroo market in over a year.

The A$500 million 10-year fixed rate note due on March 23, 2022, offers a semi-annual coupon of 5.25%. It was priced at 99.119% to yield 5.365% semi-annually. This equates to a spread of 105.75 basis points over the ACGB 5.75% due July 15, 2022; and a spread to AUD semi-quarterly mid swap of +45 bps.

The new benchmark bond was launched with an initial target size of A$200 million, but demand grew quickly to allow for an upsize to A$500mm, making this transaction AfDB’s largest Kangaroo bond outstanding. Initial soft sounding pointed to a A$250mm deal size but the rarity of the AfDB name attracted significant institutional interest particularly from Asia/Japan. This significant increase in demand was more than sufficient to allow an A$500mm deal size which was the maximum amount AfDB was willing to issue into the market.

The order book was supported by strong institutional interest both internationally and domestically, with Asia accounting for 70% of demand, Europe 2% and Australia 28%. Fund managers represented 68% of orders, followed by Insurance Companies at 16%, Banks at 12%, Centrals Banks at 2% and Private Banks at 2%. There were a total of 18 separate investors involved in the transaction.

The joint lead-managers for this offering are Deutsche Bank, RBC CM and TD Securities.