The African Development Bank launched a A$600 million (US$463.9 million) 5.5-year Kangaroo bond, marking its return to the Australian dollar bond market.

The transaction, announced on June 8, was led by Nomura and RBC Capital Markets. It is the institution’s first benchmark Kangaroo since early 2018 and its first in the mid-curve since 2015. It is also the largest AUD trade ever issued by the bank.

A release issued by the bank and copied to the Graphic Business said: “More than 30 investors participated in the deal, with a total order book of more than A$775 million, leading to an upsize of the trade from the announced size of A$250-300 million to the final size of A$600 million.

These included a strong cohort of Australian investors while fund managers were the major investor type,” it said.

Rise in global issuance

The African Development Bank Treasurer, Hassatou N’sele, was quoted as saying that the COVID-19 pandemic had led to a rise in global issuances of social bonds.

“Following on from the ground breaking US$3.1 bln 3 year ‘Fight COVID-19’ Social Bond we issued in 2020, we’re glad to see that public domestic markets, like the Kangaroo bond market, are now seeing similar development in terms of interest from dedicated ESG investors, which provided additional momentum, enabling us to print the largest trade we’ve ever done in AUD”.

Read: Pandemic could push 49 million Africans into poverty - AfDB

The release noted that African Development Bank’s social bonds have use of proceeds allocated to projects that alleviate or mitigate social issues such as improving access to electricity, water and sanitation, and improving livelihoods through flood-risk reduction and access to clean transportation and employment generation.

KangaNews data

“Recent KangaNews data show that the African Development Bank had A$1.75 billion of bonds mature between its 2015 benchmark deal and its most recent,” it said.

The Manager of Capital Markets and Financial Operations, Mr Keith Werner, said 38 per cent of investors in the deal had a socially responsible investment approach and that the African Development Bank intended to issue more social bonds in Australian dollars.

“In addition to the important contribution that socially responsible investors had to the success of this trade, it’s also gratifying to see such a large portion of the investors (41 per cent) were domestic, which is an area where we haven’t seen strong support historically. We look forward to leveraging this momentum and continue evaluating opportunities in the future in this market”, Mr Werner said.

Successes

The Australian dollar is the fifth currency in which the African Development Bank has issued social bonds since it established the programme in 2017, following deals in euros, US dollars, Norwegian kroner and Swedish kronor.

In December 2016, the African Development Bank launched its inaugural Kangaroo Green Bond. This transaction followed successful outings in USD and SEK Benchmark formats.