The African Development Bank (AfDB) has issued a three-year social bond to raise US$3 billion to support African economies who have been largely hit by the outbreak of the Covid 19 virus.
Social bonds are bond instrument where the proceeds are exclusively applied to finance social projects, and in this case the US$3 billion is expected to be used to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and African economies.
The bond, which comes at a coupon rate of 0.75 percent garnered interest from central banks and official institutions, bank treasuries, and asset managers including socially responsible investors, with bids exceeding US$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.
In a press release, the bank said it was 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.
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.
