AfDB launches $2.0bn 3-year global benchmark bond at 2.625% fixed rate

The African Development Bank (AfDB) has launched a $2.0-billion 3-year global benchmark bond at 2.625 percent fixed rate due March 22, 2021.

According to a statement, the bond issue represents the Bank’s first public market deal in 2018 after a $2.0-billion 5-year global benchmark bond priced in November 2017 and is in line with its strategy of issuing larger size, more liquid benchmark transactions.

The global benchmark, according to report was oversubscribed, with an order book in excess of US $4.25 billion. More than 80 investors participated in the transaction, including six that were new to the bank, demonstrating that the deal was well placed across diversified geographies and investor type.

Equally, the high quality of the order book is illustrated by the strong participation of Central Banks and official Institutions.

The AfDB decided to take advantage of the positive market backdrop and of the widening in US dollar swap spreads to issue its first benchmark of the year. The issuer announced the mandate on Tuesday, March 13, at 2:50 pm London time with Initial Pricing Thoughts (IPTs) in the context of mid-swaps plus 1 basis point (bp) area.

The deal enjoyed a very strong reception from the outset. Indications of interest (IOIs) from the high-quality investor base accumulated at a rapid pace, and by the end of the US trading session, IOIs exceeded the US $2.0 billion (excluding Joint-Lead Managers interest).

Books officially opened in the European morning at 8:00 am London time, with price guidance reviewed to mid-swaps flat, 1 basis point tighter than IPTs, reflecting the strong dynamics of the transaction.

Momentum continued to build throughout the European morning, with books exceeding the US $3.0 billion within an hour, and the US $4.0 billion (excluding Joint-Lead Managers interest) by midday London, allowing the issuer to set the spread 1bp tighter at mid-swaps minus 1bp. Investors showed a strong commitment to the transaction through limited price sensitivity.

The transaction was priced at 4:50 pm London with a re-offer yield of 2.661%, equivalent to a spread of 26.35bps over the 3-year US Treasury benchmark 2.375% March 2021.