On Friday, 30th September 2016, African Development Bank (AfDB), rated Aaa (Moody’s) / AAA (S&P) / AAA (Fitch), successfully launched and priced its inaugural €750mm 10-year EUR benchmark transaction due 7 October 2026.
AfDB decided to launch its debut EUR transaction to fulfil its EUR denominated needs and the 10-year transaction will serve as an anchor point to build out a full EUR curve over time. Barclays, Goldman Sachs International and SG CIB were mandated as joint lead managers on the transaction.
The mandate for a debut 10yr EUR benchmark was announced shortly after 2.30pm London time on Thursday, 29 September. With a target issuance size of €500mm, Initial Price thoughts of Mid-Swap (MS)-10 basis points (bps) were released simultaneously to the market for gathering Indications of Interest overnight.
On the back of constructive feedback from investors, books were officially opened in the European morning on Friday at 8.15am London with an unchanged price guidance of MS-10bps area. The deal met with immediate investor interest with books reaching in excess of €750mm (including €70mm Joint Lead Manager (JLM) interest) within 1.5hrs of book-building. Momentum continued to grow during the European morning with demand growing in excess of €850mm (including €50mm JLM interest) by 11.30am London, allowing the issuer to set the spread at MS-10bps and announce closure of books at 12.30pm London.
The final orderbook was of extremely high quality and saw 30 accounts participating, allowing AfDB to comfortably upsize the transaction to €750mm. The deal was priced at 2.20pm London with a re-offer yield of 0.152%, equivalent to a spread of 29.5bps vs German Benchmark Bond DBR 0.000% Aug-26
“We are extremely pleased with the outcome of our debut transaction in the Euro market and the response from high quality investors. Launching a Euro benchmark was perfect for duration and diversification purpose, responding to the needs of investors and aligned with our objectives,” said AfDB Treasurer, Hassatou N’Sele.
“It was great to see our inaugural EUR transaction so well received. We had done extensive investor work earlier in the year, which looks to have paid off. We took advantage of a window of issuance Thursday for Friday with a somewhat challenging backdrop and in spite of targeting €500 mm, based on current EUR needs, we upsized to €750mm due to higher than expected demand.” AfDB Chief Treasury Officer, Keith Werner, added.
Final distribution figures highlight AfDB’s strong penetration across key regions in Europe. The orderbook was well diversified geographically with high quality orders from Central Banks and Official Institutions who took up the lion’s share of allocation of 40%
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