Tunis — The African Development Bank (AfDB) successfully launched and priced a three-year US$ 1 billion global bond issue on 2 February.

The Bank has a borrowing programme of about US$ 5.5 billion for 2010 and after four such transactions last year, the present issue is the Bank's first foray in the global benchmark market this year. The proceeds of the issue will help finance the growing portfolio of AfDB projects in Africa. In line with the Bank's top-notch AAA credit rating, the issue was priced at mid-swaps less 2 bps.

The issue was oversubscribed with the order book reaching about US$ 1.4 billion. This oversubscription demonstrates the strong confidence the markets have in the African Development Bank and its development mandate, according to its Treasurer, Pierre Van Peteghem. He commented: "We have started our funding programme very positively this year and, since the issue was a resounding success, we are very pleased. The tight pricing achieved by AfDB, with a broad distribution both by geography and investor type, clearly demonstrates the high value that international investors place on our credit".

The wide geographical spread across the globe resulted in 39 percent of the issue going to the Americas, 48 percent to Asia, and 13 percent to Europe, Middle East and Africa region.

Confidence in AfDB also meant that all main investor types were attracted to the issue. Central banks and other official institutions accounted for 68 per cent of the issue, while 17 per cent went to fund managers, and 15 per cent to banks.

Hassatou N'Sele, Manager of Capital Markets and Financial operations indicated that "The success of this deal is a reflection of the well executed benchmarks we have brought into the market, and the intensive investor works we have embarked upon. We have seen very strong demand from central banks all over the word and attracted investors that had never participated in an AfDB benchmark before."

The issue was lead managed by Daiwa Capital Markets, Deutsche Bank, Goldman Sachs International and UBS Investment Bank. The co-lead managers were BNP Paribas, Credit Suisse, HSBC, Mizuho and Standard Chartered. Sandeep Jain, Chief Treasury officer stated that "It was heartening that there was virtual unanimity in the banking community on where they saw our credit. No soft-sounding was required for the issue and the momentum we had in the book was so strong. The issue was launched and executed the same day."

This highly successful issue comes in the wake of the Bank's first Dealer Event, held in London on 20 January. The event, which was attended by approximately 50 representatives from more than 20 banks, reflected the Bank's increased borrowing activities on the capital markets. Its purpose was to raise the Bank's profile on the markets, and to inform the investment banking community of its funding strategy and strengthen relationship with their capital market teams.

Contacts

Chawki Chahed