Photograph — Brookings Institution

The African Development Bank has raised up to $3 billion in a three-year social bond targeted at alleviating the economic and social impact of the coronavirus pandemic on African economies, the bank said in a statement on its website.

Though slow to arrive in Africa, the virus has quickly spread across 45 countries on the continent, infecting nearly 3,000 people and placing strain on already fragile health systems. Estimates suggest the region will need billions of dollars to cushion the impact of the outbreak, which has triggered severe measures in many countries such as commercial lockdowns as they scramble to contain it. 

“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus,” said Dr. Akinwumi Adesina, AfDB President. “The Bank is taking bold measures to support African countries. We are here for Africa, and we will provide significant rapid support for countries.”

Across the world, the pandemic has forced the closure of factories, disrupted supply chains, trade, travel, and is driving many economies toward recession. As the virus outbreak threatens Africa, the Bank is performing its role of assisting and preparing 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 at Crédit Agricole CIB.

The Fight Covid-19 Social Bond, with an interest rate of 0.75 percent, attracted interest from central banks and official institutions, bank treasuries, and asset managers including socially responsible investors, AfDB said.

With bids exceeding $4.6 billion, the debt instrument is the largest dollar-denominated social bond ever launched in international capital markets to date, and the largest U.S. dollar benchmark ever issued by the regional lender, according to the bank. The order book for the record-breaking bond highlights the scale of investor support, which the Bank enjoys, said the arrangers.

Fight Covid-19 was allocated to central banks and official institutions (53 percent), bank treasuries (27 percent) and asset managers (20 percent) while final bond distribution statistics were as follows – Europe (37 percent), Americas (36 percent), Asia (17 percent) Africa (8 percent) and Middle-East (1 percent).

“In a time of unprecedented market volatility, the 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,” said George Sager, Goldman Sachs’ Executive Director for SSA Syndicate. The $3 billion Covid-19 bond issuance, however, is the first part of the bank’s comprehensive response that will soon be announced, Adesina revealed.

AfDB established its Social Bond framework in 2017 and raised the equivalent of $2 billion 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.

Elsewhere on Ventures

Triangle arrow