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Capital Markets Overview
The Bank actively borrows in the capital markets to meet the development needs of African countries. Resources raised from the capital markets are used to (1) ensure that the Bank has sufficient liquidity to meet its cash flow requirements for a one-year rolling period and (2) provide cost-effective resources to fund its clients and projects. The Bank uses a variety of instruments and markets to source funds and uses the derivatives market for asset and liability management purposes. Responsiveness and flexibility are the hallmarks of the Bank’s activities in the capital markets. Its strategy for achieving its funding goals is based on the following building blocks:
- Establish a track record of issuing regular, liquid benchmark transactions in the capital markets to attract competitive funding levels and generate additional funding opportunities
- Develop diversified access to public and private markets in various currencies and build name recognition
- Access medium to long-term funding, subject to market conditions
- Deepen and broaden the Bank’s investor base through a proactive investor relations strategy
- Promote the development of African capital markets and provide local currency funding to its clients by issuing bonds denominated in local currencies
As the premier borrower from Africa, the Bank enjoys widespread name recognition in major international and domestic capital markets. Transactions include issuance in the US dollar and Euro global benchmark markets as well as the domestic markets of Australia, the United Kingdom, Canada, New Zealand, Nigeria, Switzerland, South Africa and Uganda. The Bank is also active in African currency linked transactions and private placement transactions in emerging market currencies such as the Brazilian real, Indonesian rupiah, Mexican peso, Russian Ruble, Indian Rupee, Turkish Lira etc.
As part of its commitment to supporting climate-smart and low carbon investment on the continent, the Bank established a green bond framework in 2013. The Bank also launched a social bond program in 2017, focused on meeting the critical development challenges that Africa is facing and that are at the heart of its social mandate. The Bank’s Global Debt Issuance Facility provides the platform for documentation across markets and currencies.
As of 30 September 2019, the Bank’s outstanding borrowing portfolio was UA 24.7 billion ($ 33.7 billion) across 24 currencies.
The Bank enjoys the highest possible credit rating, triple-A, assigned by the international credit rating agencies Fitch, Moody’s, S&P and Japan Credit Rating Agency. AfDB bonds are zero percent risk weighted under Basel II and level 1 assets under Basel III. AfDB bonds are eligible for repo transactions with the central banks of Australia, New Zealand, EU, UK, Nigeria, Uganda, Zambia, Kenya, Botswana and the US.
2020 Borrowing Program
The Board of directors has authorized the Bank’s 2020 annual borrowing program for an amount of UA 5.989 billion ($ 8.3 billion).