The African Development Bank (AfDB) has raised $3-billion in a three-year bond to help alleviate the economic and social impact of the Covid-19 pandemic on livelihoods and Africa’s economies.
The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries and asset managers, including socially responsible investors, with bids exceeding $4.6-billion.
According to a statement on March 30, this is the largest dollar-denominated social bond ever launched in international capital markets to date, and the largest dollar benchmark ever issued by the AfDB.
It will pay an interest rate of 0.75%.
Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%) and Middle East (1%).
The AfDB is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.
“These are critical times for Africa as it addresses the challenges resulting from the coronavirus . . . This $3-billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced,” AfDB president Dr Akinwumi Adesina says, adding that the AfDB “will provide significant rapid support for countries”.
The order book for this record-breaking bond highlights the scale of investor support, which the AfDB enjoys, say the arrangers.
Crédit Agricole CIB sustainable banking head Tanguy Claquin, meanwhile, notes that, as the Covid-19 outbreak is “dangerously threatening” Africa, the AfDB “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”.
Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3 000 people across 45 countries, placing strain on already fragile health systems.
It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it.
Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel and driving many economies toward recession.