Saturday, March 28, 2020 /07:30
AM / by AfDB Group / Header Image Credit: AfDB Group
The African Development Bank (AAA) has raised an
exceptional $3 billion in a three-year bond to help alleviate the economic and
social impact the Covid-19 pandemic will have on livelihoods and Africa's
economies.
The Fight Covid-19 Social bond, with a three-year
maturity, garnered interest from central banks and official institutions, bank
treasuries, and asset managers including Socially Responsible Investors, with
bids exceeding $4.6 billion. This is the largest Social Bond ever launched in
international capital markets to date, and the largest US Dollar benchmark ever
issued by the Bank. It will pay an interest rate of 0.75%.
The African Development Bank Group is moving to
provide flexible responses aimed at lessening the severe economic and social
impact of this pandemic on its regional member countries and Africa's private
sector.
"These are critical times for Africa as it addresses
the challenges resulting from the Coronavirus. The African Development Bank is
taking bold measures to support African countries. This $3 billion Covid-19
bond issuance is the first part of our comprehensive response that will soon be
announced. This is indeed the largest social bond transaction to date in
capital markets. We are here for Africa, and we will provide significant rapid
support for countries," said Dr. Akinwumi Adesina, President of the African Development
Bank Group.
The order book for this record-breaking bond
highlights the scale of investor support, which the African Development Bank
enjoys, said the arrangers.
"As the Covid-19 outbreak is dangerously threatening
Africa, the African Development Bank lives up to its huge responsibilities and
deploys funds to assist and prepare the African population, through the
financing of access to health and to all other essential goods, services and
infrastructure," said Tanguy Claquin, Head of Sustainable Banking, Crédit
Agricole CIB.
Coronavirus cases were slow to arrive in Africa, but
the virus is spreading quickly and has infected nearly 3,000 people across 45
countries, placing strain on already fragile health systems.
It is estimated that the continent will require many
billions of dollars to cushion the impact of the disease as many countries
scrambled contingency measures, including commercial lockdowns in desperate efforts
to contain it. Globally, factories have been closed and workers sent home,
disrupting supply chains, trade, travel, and driving many economies toward
recession.
Commenting on the landmark transaction, George Sager,
Executive Director, SSA Syndicate, Goldman Sachs said: "In a time of
unprecedented market volatility, the African Development Bank has been able to
brave the capital markets in order to secure invaluable funding to help the
efforts of the African
continent's fight against Covid-19. Not only that, but
in the process, delivering their largest ever USD benchmark. A truly remarkable
outcome both in terms of its purpose but also in terms of a USD financing".
The Bank established its Social Bond framework in 2017
and raised the equivalent of $2 billion through issuances denominated in
Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, 'Second most impressive social or sustainability bond issuer" at the Global
Capital SRI Awards.
"We are thankful for the exceptional level of interest
the Fight Covid-19 Social Bond has raised across the world, as the African
Development Bank moves towards lessening the social and economic impact of the
pandemic on a continent already severely constrained. Our Social bond program enables
us to highlight our strong development mandate to the investor community,
allowing them to play a part in improving the lives of the people of Africa.
This was an exceptional outcome for an exceptional cause," said Hassatou Diop
N'Sele, Treasurer, African Development Bank.
Fight Covid-19 was allocated to central banks and
official institutions (53%), bank treasuries (27%) and asset managers (20%).
Final bond distribution statistics were as follows: Europe (37%), Americas
(36%), Asia (17%) Africa (8%,) and Middle-East (1%).

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