African Development Bank - AUD 55,000,000 3.500% Notes due December 2031
- On Tuesday, December 6, 2016, the African Development Bank (AfDB) launched its inaugural Kangaroo Green Bond. This transaction follows successful outings in USD and SEK Benchmark formats.
- The 15-year maturity, maturing 15 December 2031, marks an extension of AfDB’s existing Kangaroo curve (June 2026) and represents the longest SSA Kangaroo bond currently in the market.
- The bond was priced at mid-swaps +53 bps, equivalent to a yield of 3.6025% and a spread of 58.25 bps over the ACGB 3.250% April 2029.
- This transaction marks the third Green Bond by an SSA borrower in the Kangaroo market, following 5-year outings by the International Bank for Reconstruction and Development (IBRD) and Kreditanstalt für Wiederaufbau (KFW) in 2013 and 2014, respectively.
- The new bond is AfDB’s sixth Green Bond transaction under its Green Bond framework: http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/green-bond-program/.
- Nomura was the sole lead manager for the transaction.
“We were very excited to be involved in this landmark transaction in the AUD market and it’s a great way to finish off the year. We have increasing ambitions in terms of climate finance and this was an excellent opportunity to broaden investor support in order to further help the African continent’s gradual transition to green growth.” – Keith Werner, Chief Treasury Officer, African Development Bank
“Following successful Green Bond outings in USD and SEK Benchmark format, the AfDB has now provided a new maturity bucket to SRI investors in the Kangaroo market, with an increasing number of accounts attracted by the lengthening of duration theme. Nomura were delighted to have facilitated this transaction for both the AfDB and SRI investor clients.” – Mark Yeomans, Executive Director, DCM SSA at Nomura.
Bond Terms Summary:
African Development Bank in Brief:
The African Development Bank (AfDB) Group is the premier development finance institution in Africa with a mandate to spur sustainable economic development and social progress in the continent, thereby contributing to poverty reduction. The Bank Group achieves this objective by mobilizing and allocating resources for investment on the continent; and providing policy advice and technical assistance to support development efforts. The African Development Bank’s authorized capital of around USD 100 billion is subscribed to by 80 member countries made up of 54 African countries and 26 non-African countries.
The African Development Bank’s Strategy for 2013–2022 (Ten-Year Strategy) reflects the aspirations of the entire African continent and is firmly rooted in a deep understanding and experience of how far Africa has come in the last decade, and where it wishes to go to in the next. In 2015, a new strategic operational agenda was laid out for the Bank, outlined in the “High 5s”, aimed at providing a sharp focus on the Bank Group’s work as it implements the Ten-Year Strategy. The High 5s are to: Light up and Power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the People of Africa. These operational priorities are consistent with the Sustainable Development Goals and therefore essential in transforming the lives of the people of Africa through rapid, sustained and inclusive growth. An amount equal to the net proceeds of AfDB’s Green Bonds is initially allocated to a sub-portfolio within the Treasury’s liquidity portfolio. As and when eligible projects begin to disburse, Green Bond proceeds in the liquidity portfolio are then allocated to the loan pools containing the disbursing green projects.
Typical eligible projects include, but are not limited to, green field renewable energy generation, biosphere conservation projects, water supply and access, solid waste management as well as energy efficiency projects. Ongoing projects financed by AfDB Green Bond proceeds include:
- Africa’s largest 160 MW solar power plant, Ouarzazate I, in Morocco
- Itezhi Tezhi 120 MW hydro generation project in Zambia
- ONEE Integrated 1,100 MW wind/hydropower plant in Morocco
- Eskom Sere 100 MW wind farm in South Africa
- Cabeólica 25.5 MW wind power plant in Cape Verde