The African Development Bank launches a new NZD 150 million 10-year “Light up and Power Africa” Kauri benchmark

16/04/2019
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The African Development Bank, rated Aaa/AAA/AAA/AAA by Moody’s/S&P/Fitch/Japan Credit Rating Agency, has successfully launched a new NZD 150 million 10-year “Light up and Power Africa” Kauri benchmark  due 7 March 2029.

The bond, launched on 21 February 2019, carries a semi-annual coupon of 2.85% and priced at a re-offer yield of 2.896%, 70 basis points (bps) over the New Zealand Government Bond NZGB 3% 20 April 2029 (NZD Mid-swaps + 43.3bps).

The deal was driven by a reverse-enquiry anchor order out of Asia. It was announced on 21 February 2019 and books opened at the beginning of the Asian afternoon on the same day, with NZD 100 million minimum deal size. Given volatile market conditions, books closed relatively quickly the same day, to ensure pricing remained within the anchor investor’s target. At Asia close, a new NZD 150 million 10-year Kauri transaction was launched, with all the demand coming from Asia.

The transaction marks the Bank’s second and largest ever Kauri issuance in this rare maturity. The African Development Bank launched their inaugural NZD 100 million 5-year Kauri benchmark in 2014. Importantly, this transaction represents the Bank’s first Kauri issued under one of the High 5 themes, “Light up and Power Africa”.

The Bank will direct an amount equal to the net proceeds of the issue of the Notes to lending projects which aim to “Light up and Power Africa”, subject to and in accordance with the Issuer’s lending standards, and on a best efforts basis. The proceeds of the Notes will be included in the ordinary capital resources of the Issuer and will be used for the general operations of the Issuer in accordance with the Agreement establishing the African Development Bank.

Access to energy is critical for industrialisation to take hold in Africa, creating jobs and unlocking economic potential. It is also key to improving people’s health, education and quality of life. Yet access to energy remains unacceptably low across the continent. Reliable, affordable power is urgently needed to transform Africa’s economy and achieve the UN Sustainable Development Goals (SDGs).

This new issue is in line with several of the UN SDGs:

Daiwa was sole lead manager on the Bank’s NZD 150 million 10-year Kauri Bond.

Daiwa is thrilled to have arranged the African Development Bank’s ’s inaugural SRI Kauri bond to “Light up and Power Africa”, building on its  strong franchise in the Global Capital Markets and embedding even further their long standing commitment to the Socially Responsible Investment (SRI) market. Daiwa has led over 100 SRI trades in various markets, across 9 currencies and encompassing 21 different themes and is immensely proud to highlight the 10-year track record of SRI trades with the African Development Bank.

Vince Purton, Head of DCM at Daiwa

The African Development Bank is delighted to be able to respond to the needs of SRI investors and issue a 10-year themed Kauri bond. Demand for issues linked to our High 5 strategy remains strong and

allows us to direct proceeds towards the most vulnerable people in Africa. About 600 million people in Africa have no access to electricity and we remain committed to helping them escape from energy poverty.

Hassatou N’Sele, Treasurer, African Development Bank Group

Bond Summary Terms:

Issuer:

African Development Bank

Issuer rating:

Aaa/AAA/AAA/AAA (Moody’s/S&P/Fitch/Japan Credit Rating Agency)

Amount:

NZD 150 million

Pricing date:

21 February 2019

Settlement date:

7 March 2019 (T+5)

Coupon:

2.85% Fixed, Semi-Annual Act/Act

Maturity date:

7 March 2029

Re-offer price:

99.603%

Re-offer yield:

2.896% annual

Re-offer spread:

Mid-swaps + 43.3bps / NZGB 3% 20 April 2029 + 70bps

Sole Lead manager:

Daiwa Capital Markets Europe Limited

 ISIN:

NZAFBDT003C1

Contacts

For further details, please contact the African Development Bank funding team: fundingdesk@afdb.org


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