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Absa appointed as joint bookrunner in first dollar corporate social bond

14th October 2019

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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Absa Corporate and Investment Banking (CIB) was recently appointed by Bayport Management to be the joint bookrunner in the first ever dollar-denominated social bond to be issued by a corporate in Africa.

The $260-million senior unsecured social bond, which is due in 2022, was heavily oversubscribed, which the statement said “reflects investors’ recognition of the positive social impact of Bayport’s services on the markets in which the group operates”.

The bond has since been listed on the Nasdaq Stockholm Sustainable Bond List.

Social bonds are instruments whose proceeds exclusively finance or re-finance projects that deliver a wider social impact and, in Bayport’s case, this includes job creation through financing small and medium-sized enterprises, as well as financial inclusion.

Absa’s participation in the Bayport social bond is aligned to the bank’s strategy to be a force for good in society, which focuses on providing finance and assisting clients to achieve sustainable economic growth in the markets it operates, Absa CIB investment banking head David Renwick said on Monday.

According to him, the Bayport social bond is the first to be raised by a corporate in Africa and its success shows the potential of attracting local and international investors through such instruments to finance investments and projects that have a direct and lasting impact in Africa.

“There is a definite trend from global investors to invest in more socially responsible projects and companies because they want to see their funds are being invested in responsible activities,” he said, adding that green bonds were the first type of socially responsible investing instruments and have been around for at least a decade.

“In Africa, green bonds have been issued in countries such as South Africa and Nigeria,” Renwick noted.  

However, he explained that social bonds are newer and, while there have been a few such bonds issued in the past, the International Capital Market Association published its Social Bond Guidelines in 2018 to provide a disclosure framework meant to promote integrity in the development of the market by clarifying the approach for issuing a social bond.

Renwick said Bayport chose Absa because of the long-term relationship the company has with the bank.

“Because they wanted to issue in the international market, it was critical for them to partner with a bank that understands their business and risk profile. It, therefore, became a natural choice to appoint Absa as the only African bank on this transaction,” he elaborated.

Bayport capital markets executive David Rajak, meanwhile, commented that the successful dollar-denominated corporate social bond issue affirms that social relevance underpins Bayport’s business, and that the market recognises it.

“This, together with the group’s sustained robust financial performance, has helped drive a significantly broader base of investors compared to Bayport’s six previous bonds issues in the international capital markets.

“One of Bayport’s core values is to enable economic and self-empowerment by giving access to life-changing financial solutions, which is what we will do with the capital raised through the social bond”. 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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