AfDB launches US$3bn bond to fight Covid-19
THE African Development Bank (AfDB) has raised an exceptional US$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 US$4,6 billion.
This is the largest Social Bond ever launched in international capital markets to date, and the largest US$ benchmark ever issued by the bank. It will pay an interest rate of 0,75 percent.
“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,” Akinwumi Adesina, president of the African Development Bank Group, said.
“This US$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.”
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.
The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.
Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected thousands of 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 lock-downs 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.
The bank established its Social Bond framework in 2017 and raised the equivalent of US$2 billion through issuance 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 programme 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.