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AfDB issues 1.375% USD 1 billion global benchmark due 12 February 2020

On Thursday, February 5, 2015, the African Development Bank (AfDB) successfully launched and priced a new 1 billion 5-year US dollar global benchmark due February 12, 2020. This is the AfDB’s first US dollar global benchmark of the year.

The transaction was announced on Wednesday, February 4 at 2:15 p.m. London time with initial price thoughts of midswaps +2 basis points area.

Indications of interest exceeded USD 1.6 billion overnight, which enabled the Bank to tighten price guidance to midswaps plus 1 basis points area when opening books at 8:15 a.m. the following day. The orderbook grew extremely quickly, reaching USD 2 billion after only 1 hour of book-building, with investors showing little spread sensitivity.

Given AfDB’s strong liquidity position, the deal size was capped at a maximum of USD 1 billion from the outset. Consequently, the decision was taken to close the orderbook at 9:20 a.m. London time, well ahead of the originally anticipated schedule. The deal recorded the largest ever level of oversubscription for an AfDB debt offering.

The strength of the orderbook allowed the lead managers to price AfDB’s new benchmark at midswaps flat (equivalent to US Treasuries plus 17.6 basis points), at the tight end of the original price guidance.

Over 30 investors participated in the transaction, with high quality orders from Central Banks and Official Institutions (73%) taking the bulk of the transaction. Final distribution figures highlight AfDB’s strong penetration across different regions, with the participation from Asian investors (55%) setting a new high for AfDB.

Joint Lead Managers on the transaction were Daiwa, Deutsche Bank, Morgan Stanley and TD Securities.

The AfDB is rated triple-A by all major credit rating agencies including Fitch, Japan Credit Rating Agency, Moody’s, and Standard & Poor’s. The new 5-year USD 1 billion global benchmark transaction demonstrates the loyal following the Bank benefits from in the international capital markets.

Next Finance , February 2015

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