The transaction was oversubscribed, with an order book in excess of EUR 1.7 billion, diversified across geographies and investor profiles, with nearly 50 investors participating
The African Development Bank, rated Aaa/AAA/AAA by Moody’s/S&P/Fitch, has successfully priced a EUR 1 billion 10-year Global Benchmark, due 21 March 2029, its first benchmark transaction of the year.
This transaction, priced Thursday 14 March 2019, marks the Bank’s s positioning in the EUR market, in line with its strategy of building a reference curve. After its inaugural EUR benchmark issued in 2016, the Bank’s efforts in marketing are truly bearing fruit with the largest EUR order book achieved to date. The transaction underlines the issuer’s access to EUR liquidity with no concession and the intrinsic demand for the name within the European investor base.
The transaction was oversubscribed, with an order book in excess of EUR 1.7 billion, diversified across geographies and investor profiles, with nearly 50 investors participating. The high quality of the order book is illustrated by the strong participation of Central Banks and Official Institutions.
Taking advantage of the positive market backdrop and a clear issuance window, the Bank announced the transaction on Wednesday 13 March at 11:30am London time. The following morning, the market opened with a constructive tone and Initial Price Thoughts (IPTs) of mid-swaps – 1bp area were released at 8:25am London time.
Momentum was strong from the outset. Indications of Interest (IOIs) accumulated at a good pace and by 9:55am London time, IOIs were in excess of EUR 1.1 billion (excluding Joint-Lead Managers (JLM) interest). This allowed the issuer to revise price guidance to mid-swaps – 2bps area and officially set the deal size at EUR 1 billion. Investor interest continued to build throughout the European morning.
With an order book exceeding EUR 1.7 billion (excluding JLM interest), the issuer was able to set the spread at mid-swaps – 3bps at 11:30am London time with the order book set to close 30 minutes later at 12:00pm London time. The transaction was priced at 3:04pm London time with a re-offer yield of 0.557%, equivalent to a spread of 47.9bps vs. DBR 0.25% February 2029.
“We have been focused on building a strong investor base and a solid curve in Euro since our first foray in that market three years ago, and our approach has been met with success. We offer rarity, triple-A strength, performance, and a mandate to combat poverty and improve lives on the African continent.” Hassatou N’Sele, Treasurer of the African Development Bank Group.
Bond Summary Terms:
Issuer: African Development Bank (“AfDB”)
Issuer rating: Aaa / AAA / AAA (Moody’s / S&P / Fitch)
Amount: EUR 1 billion
Pricing date: 14 March 2019
Settlement date: 21 March 2019 (T+5)
Coupon: 0.50%, Fixed, Annual Act/Act
Maturity date: 21 March 2029
Re-offer price: 99.447%
Re-offer yield: 0.557% annual
Re-offer spread: Mid-Swaps – 3bps / DBR 02/29 + 47.9bps
Joint-lead managers: BNP Paribas, BofA Merrill Lynch, Goldman Sachs International, J.P. Morgan
Co-lead manager: DZ Bank