AfDB issues 0.75% US$ 1 billion global benchmark

 The African Development Bank (AfDB) on Friday launched and priced a new $1 billion two-year global benchmark, which is due to take effect from Nov. 3.

This is contained in a financial document made available to newsmen in Lagos.

According to the document, this is the AfDB’s second US dollar global benchmark of the year.

This follows a successful five-year benchmark transaction executed in February and it is the first two-year global benchmark since 2009.

“The two-year benchmark transaction was announced with initial pricing thoughts in the area of mid-swaps +12 basis points area.

“The order book was extremely robust with indications of interest from investors in excess of US$ 1.9 billion before the transaction officially opened.

“This represented a positive sign, given the recent volatility and uncertainty affecting global capital markets,’’ the bank said.

The bank stated that with positive feedback from investors, the size of the order book continued to grow after the official open.

“The order book was closed at 9:45 a.m. London time after only 90 minutes of book-building, capturing orders in excess of US$ 2.1 billion.

“The transaction was priced at 4:45 p.m. London time on Tuesday Oct. 27 at a spread of mid-swaps plus 9 basis points.

“This was equivalent to 20.95 basis points over the 0.625 per cent UST due in September 2017,’’ the bank stated.

It said that the demand was driven by high quality accounts as the 64 per cent participation from central banks and official institutions demonstrates.

“The remainder was split between fund managers (20 per cent), pension funds (10 per cent) and banks and corporate (6 per cent).

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“Geographically, demand was well diversified across the globe with the Americas taking 41 per cent, Europe 32 per cent, Asia 19 per cent and Africa 8 per cent.

“The joint lead managers on the transaction were Bank of America Merrill Lynch, Goldman Sachs, J.P. Morgan and Societe Generale.

“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 two-year $1 billion global benchmark transaction demonstrates the loyal following the AfDB benefits from in the international capital markets,’’ the document further read in part.

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