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AFDB raises $3billion bond program in fight against Coronavirus

....as other development agencies join in CONVID-19 fight

The African Development Bank ( AFDB) sold a record $3 billion debt issue joining the fold of multilateral and public lenders ramping up efforts to raise financing to help combat the fallout from the coronavirus outbreak.

The three-year bond, the Afdb’s biggest dollar issue to date, aims to provide “support and financing to countries and businesses fighting against COVID-19”, a note from a lead manager of the issue said.

Through this Fight CO

VID-19 Social Bond, investors will be able to support African communities to help curb the spread of the virus and overcome the many challenges caused by the outbreak,” the statement said.

Order books grew to more than $4.6 billion, according to lead managers. The bond will pay a coupon of 0.75%.

The development bank, which is Aaa-rated, is just one of a number of public issuers selling fresh debt linked to efforts to combat the virus spread.

The International Finance Corp has also sold a $1 billion dollar-denominated social bond as part of the World Bank Group’s $12 billion coronavirus financing package.

While on Thursday, the Inter-american Development Bank (IADB) launched on a five- year dollar- denominated bond expected to price in the days to come.

It is part of the IADB’S $2 billion programme aimed at helping “countries throughout Latin America and the Caribbean cope with challenges posed by the pandemic”, according to another term sheet.

The African Export-import Bank ( Afreximbank) during the week announced a $3-billion facility, named Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic and health impacts of the COVID-19 pandemic.

The fund, PATIMFA, approved by the Bank’s Board of Directors during its sitting on 20 March, will provide financing to assist Afreximbank member countries to adjust in an orderly manner to the financial, economic and health services shocks caused by the COVID- 19 pandemic, according to information released by the Bank.

It will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions.

In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings.

It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc.

The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afreximbank.

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