AfDB launches Kangaroo social bond sum of $463.9m

AfDB launches Kangaroo social bond sum of $463.9m

Hassatou N’sele, treasurer of the African Development Bank (AfDB) recently revealed the COVID-19 pandemic had led to a rise in global issuances of social bonds.

“Following on from the ground breaking $3.1 billion 3-year ‘Fight Covid-19’ Social Bond we issued in 2020, we’re glad to see that public domestic markets, like the Kangaroo bond market, are now seeing similar development in terms of interest from dedicated ESG investors, which provided additional momentum enabling us to print the largest trade we’ve ever done in AUD,” N’sele said.

In a recent report, the AfDB was said to have launched $463.9 million USD (an equivalent of Australia’s $600million) 5.5-year Kangaroo bond, marking its return to the Australian dollar bond market.

The transaction was led by Nomura and RBC Capital Markets. It is the institution’s first benchmark Kangaroo since early 2018 and its first in the mid-curve since 2 015. It is also the largest AUD trade ever issued by the bank.

More than 30 investors participated in the deal, with a total

order book of more than $775 million, leading to an upsize of the trade from the announced size of $250-300 million to the final size of $600 million. These included a strong cohort of Australian investors, while fund managers were the major investor type.

Recent data from KangaNews show that the AfDB had about A$1.75 billion of bonds maturity between its 2015 deal and its most recent benchmark. In addition, The AfDB’s social bonds have use of proceeds allocated to projects that alleviate or mitigate social issues such as improving access to electricity, water and sanitation, and improving livelihoods through flood-risk reduction and access to clean transportation and employment generation.

Commenting on the development, Keith Werner, Manager of Capital Markets and Financial Operations said, “In addition to the important contribution that socially responsible investors had to the success of this trade, it’s also gratifying to see such a large portion of the investors were domestic, which is an area where we haven’t seen strong support historically. We look forward to leveraging this momentum and continue evaluating opportunities in the future in this market”.

Be informed that about 38% of investors in the deal had a socially responsible investment approach and that the African Development Bank intends to issue more social bonds in Australian dollars in coming days.

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