AFRICA – To combat the economic and social impact of the Coronavirus (COVID-19) outbreak, the African Development Bank (AfDB) has raised US$3bn in the form of a three-year bond, known as the ‘Fight COVID-19 Social Bond’.
The ‘Fight Covid-19 Social Bond’ has been allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%) with bids exceeding US$4.6bn.
“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank 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.
The AfDB states that the ‘Fight COVID-19 Social Bond’ is the largest dollar denominated social bond ever launched in the international capital market to date, as well as being the largest US Dollar benchmark ever issued by the bank.
The bank’s efforts strive to provide a flexible response to the outbreak to lessen the severity of the economic and social impact that the pandemic is imposing on livelihoods within the region and the private sector.
“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.
“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.”
The bond comes as the first part of the bank’s comprehensive response to COVID-19, with further announcements to follow.
It has been estimated that the continent will need billions of dollars to lessen the impact of the disease to its supply chains, trade, travel and overall economy.
“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. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing,” commented George Sager, Executive Director, SSA Syndicate, Goldman Sachs.
Originally establishing its Social Bond framework back in 2017, the bank raised the equivalent of US$2billion via Euro and Norwegion Krone. In 2018, the bank was named the second most impressive social or sustainability bond issuer at the Global Capital SRI Awards.
“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.
“Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause.”