The African Development Bank (AfDB) has introduced its first sustainable US dollar-denominated 750 million perpetual subordinated hybrid capital notes.
Rated Aaa/AAA/AAA/AAA by Moody’s/S&P/Fitch/Japan Credit Rating, all stable, the transaction marks a significant step for the institution in optimising its balance sheet in line with the G20 Capital Adequacy Framework (CAF) recommendations to boost lending capacity.
Launched on January 30, 2024, with a coupon of 5.75 percent until August 2034 and a 10.5-year first call date, the transaction garnered immense interest, reaching a peak order book of over USD 6 billion.
Over 275 investors participated, with a majority being allocated shares. Hedge/Specialized funds dominated the allocation (54.8%), followed by Asset Managers (27.8%), Central Banks/Official Institutions (6.7%), and Pension Funds/Insurance (6.6%).
Hassatou N’Sele, Vice President for Finance and CFO of the AfDB, highlighted the significance of the move: “This landmark transaction was received with marked enthusiasm by a broad range of investors. It paves the way for the African Development Bank and other AAA-rated Multilateral Development Banks to further leverage their capital base and increase their support to Africa and the developing world.”
Omar Sefiani, Bank Group Treasurer, expressed satisfaction with the overwhelming response from investors: “We saw tremendous interest from over 275 investors resulting in a record order book for the AfDB. The outstanding success of this transaction allows the African Development Bank to demonstrate that MDBs can tap the private investor market to supplement their capital base and therefore allow incremental sustainable lending to their clients.”
The AfDB mandated BNP Paribas and Goldman Sachs International as Joint Structuring Agents and Barclays, BNP Paris, BofA Securities, and Goldman Sachs International as Joint Bookrunners to lead manage its new Perpetual Non-call (PerpNC) 10.5-year inaugural USD Global SEC-exempt Sustainable Hybrid transaction.
