The African Development Bank (AfDB) has launched and priced a $2.5 billion 5-year Global Benchmark bond due 23rd March 2026. This is the Bank’s first $ benchmark of the year.
The new transaction represents AfDB’s largest 5-year $ Global Benchmark ever issued. It is also its largest orderbook achieved for a 5-year benchmark transaction. Also, the final orderbook closing is in excess of $3.6 billion, excluding Joint Lead Managers (JLM) interest. There 72 investors participating.
The AfDB is rated Aaa/AAA/AAA/AAA by Moody’s/S&P/Fitch/Japan Credit Rating respectively, all with a stable outlook.
About the Bond
The AfDB said in a statement that the success of this 5-year transaction is a clear vote of confidence from investors in AfDB’s AAA credit. Global asset managers and bank treasuries were key contributors to the strong dynamic of the transaction. And also played a key role in its success, illustrating its solid partnership with the AfDB.
The AfDB’s mandate for a 5-year $ Global Benchmark was announced on Monday, March 15, at 12.04 pm London time. However, the Initial Pricing Thoughts (IPTs) were released at mid-swaps + 6 basis points (bps) area. The deal enjoyed robust investor demand from the outset as Indications of Interest (IOIs) from AfDB’s high-quality investor base. This was accumulated at a rapid pace, exceeding $2.4 billion (excluding JLM interest) overnight.
Performance of the Bond so far
The bond has performed so well few days after it was issued. The AfDB said the books officially opened the following morning Tuesday, March 16, at 8.09 am London time.
Moreover, the Bank indicated that due to the large and high-quality IOIs, price guidance was revised to mid-swaps + 5bps area. It further notes that the orderbook continued to grow throughout the morning, with investor demand approaching $3.4 billion by 10.50am London time. This, the Bank said, allowed to set the spread at mid-swaps + 5bps. It added that this level represents a new issue concession of only 1bp versus the estimated fair value.
According to the AfDB, the quality of the orderbook allowed the transaction to be launched with a size of $2.5 billion at 2.06pm London time. The final orderbook closed in excess of $3.6 billion, excluding JLM interest.
Also, the AfDB indicated that shortly thereafter 3.37 pm London time, the transaction officially priced at mid-swaps + 5bps. This is equivalent to a reoffer yield of 0.949% and a spread of 13.5bps vs the on-the-run 5-year US Treasury.
“This is our largest 5-year dollar benchmark transaction, and its success reflects the strong interest from our growing investors across the globe for the Bank’s credit story and the quality of its transactions”- Hassatou Diop N’Sele, Group Treasurer, African Development Bank.
Investor distribution statistics
The AfDB said that the transaction is yet another demonstration of its extremely broad and high-quality investor base. The AfDB noted that it has distributed the bond is well across different geographies and investor types. Accounts from the Americas received 50% of allocations, Europe 36%, and Asia 10%. Meanwhile, investors from Africa and the Middle East rounded out the remainder of the book with 4% of the allocations.
By investor type, Asset Managers/Insurance/Pension Funds led the book with 37% of allocations, followed by Banks with 36%. The Central Banks/Official Institutions, however, took 27%.
The new transaction represents AfDB’s largest 5-year $ Global Benchmark ever issued. This is also the Bank’s largest orderbook for a 5-year benchmark transaction. Also, the final orderbook closing is in excess of $3.6 billion, excluding Joint Lead Managers (JLM) interest. There 72 investors participating.
About the Bond
The AfDB said in a statement that the success of this 5-year transaction is a clear vote of confidence from investors in AfDB’s AAA credit. Global asset managers and bank treasuries were key contributors to the strong dynamic of the transaction. And also played a key role in its success, illustrating its solid partnership with the AfDB.
The AfDB’s announced the mandate for a 5-year $ Global Benchmark on Monday, March 15, at 12.04 pm London time. However, the bank released the Initial Pricing Thoughts (IPTs) at mid-swaps + 6 basis points (bps) area. The deal enjoyed robust investor demand from the outset as Indications of Interest (IOIs) from AfDB’s high-quality investor base.
Performance of the Bond so far
The AfDB said the books officially opened the following morning Tuesday, March 16, at 8.09 am London time. Moreover, the Bank indicated that due to the large and high-quality IOIs, price guidance was revised to mid-swaps + 5bps area. It further notes that the orderbook continued to grow throughout the morning, with investor demand approaching $3.4 billion by 10.50am London time. This, the Bank said, allowed to set the spread at mid-swaps + 5bps. It added that this level represents a new issue concession of only 1bp versus the estimated fair value.
The bank was able to launch the transaction with a size of $2.5 billion at 2.06pm London time due to the quality of the orderbook. The final orderbook closed in excess of $3.6 billion, excluding JLM interest.
Also, the AfDB indicated that shortly thereafter 3.37 pm London time, the transaction officially priced at mid-swaps + 5bps. This is equivalent to a reoffer yield of 0.949% and a spread of 13.5bps vs the on-the-run 5-year US Treasury.
“This is our largest 5-year dollar benchmark transaction, and its success reflects the strong interest from our growing investors across the globe for the Bank’s credit story and the quality of its transactions”- Hassatou Diop N’Sele, Group Treasurer, African Development Bank.
Investor distribution statistics
The AfDB said that the transaction is yet another demonstration of its extremely broad and high-quality investor base. It noted that the bond is well allocated across different geographies and investor types. Accounts from the Americas received 50% of allocations, Europe 36%, and Asia 10%. Meanwhile, investors from Africa and the Middle East rounded out the remainder of the book with 4% of the allocations.
By investor type, Asset Managers/Insurance/Pension Funds led the book with 37% of allocations, followed by Banks with 36%. The Central Banks/Official Institutions, however, took 27%.
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