US$3bn ‘Fight COVID-19’ social bond launched in Africa

AfDN fight covidThe African Development Bank (AfDB) has raised a US$3bn in a three-year bond to help alleviate the economic and social impact the COVID-19 pandemic will have on livelihoods and Africa’s economies

The Fight COVID-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries and asset managers including socially responsible investors, with bids exceeding US$4.6bn. This is the largest dollar denominated Social Bond ever launched in international capital markets to date, and the largest US$ benchmark ever issued by the Bank. It will pay an interest rate of 0.75 per cent.

The AfDB will provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.

“This US$3 billion COVID-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest dollar social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr Akinwumi Adesina, president of the AfDB.

“As the COVID-19 outbreak is dangerously threatening Africa, the AfDB lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, head of sustainable banking, Crédit Agricole CIB.

Coronavirus spreading quikly in Africa

Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems.

It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel and driving many economies toward recession.

George Sager, executive director, SSA Syndicate, Goldman Sachs, said, “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African continent's fight against COVID-19.”

The Bank established its social bond framework in 2017 and raised the equivalent of US$2bn through issuances denominated in Euro and Norwegian krone. In 2018, the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.

Fight COVID-19 was allocated to central banks and official institutions (53 per cent), bank treasuries (27 per cent) and asset managers (20 per cent). Final bond distribution statistics were as follows: Europe (37 per cent), Americas (36 per cent), Asia (17 per cent) Africa (eight per cent) and the Middle East (one per cent).

 

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