Chronicle Editor
Oliver Kazunga, Senior Business Reporter
THE African Development Bank (AfDB) says its US$3 billion “Fight Covid-19” social bond has been listed on the London Stock Exchange and is now available through the bourse’s Sustainable Bond Market.
Last week, the regional financial institution announced that it had raised an exceptional US$3 billion in a three-year bond to help alleviate the economic and social impact the global pandemic, Covid-19 will have on the livelihoods and African economies.
In a statement this week, AfDB said the “Fight Covid-19” social bond, the largest social bond to date to be issued in the capital markets, listed on London Stock Exchange on April 3, was now available through its Sustainable Bond Market.
“The listing marks an important milestone as the bank launches its first bond on London Stock Exchange.
“The over-subscribed transaction, which attracted US$4,6 billion of interest in the book and raised an exceptional US$$3 billion, was launched to alleviate the impact of Covid-19 on Africa’s economies and livelihoods,” said the regional financier.
AfDB said the three-year maturity bond, garnered interest from central banks and official institutions, bank treasuries and asset managers including Environment, Social and Governance (ESG) investors.
Several high-quality ESG investors actively supported the remarkable transaction, including Affirmative Investment Management (United Kingdom), Breckinridge, Columbia Threadneedle (United States of America), the Government Pension Investment Fund, the International Fund for Agricultural Development, Pension Boards – United Church of Christ, PineBridge Investments, Praxis Impact Bond Fund, TIAA/Nuveen and the United Nations Development Programme.
“The international community must work together to successfully tackle the coronavirus pandemic. The UK, along with partners like the African Development Bank and London Stock Exchange Group, is supporting the most vulnerable countries to invest in their own health systems and avoid economic hardship,” International Development secretary Ms Anne-Marie Trevelyan was quoted as saying about the listing.
“While we invest in areas like vaccine research to help end the pandemic sooner, this private investment through the AfDB, and our support for emergency lending through the IMF, will also help limit its impact on the global economy,” Ms Trevelyan further noted.
AfDB said the LSE, at the heart of London’s vibrant financial hub, was championing forward-looking initiatives aimed at deepening and diversifying the market.
“Its dedicated Sustainable Bond Market draws innovative issuers and improves access, flexibility and transparency for investors,” said AfDB.
It is hoped that eligible social or sustainability bonds with use of proceeds aligned to mitigating the impact of Covid-19 will be admitted on the exchange with admission fees waived for an initial period of three-months, LSE has announced.
Such social and sustainability bonds, fund essential services like healthcare, water and sanitation, supporting employment, or with a link to the relevant UN Sustainable Development Goals.
The bourse chief executive officer Mr Nikhil Rathi, who is also group director of International Development was quoted as saying: “We welcome the first bond from African Development Bank to list on our market and support them in their vital efforts to mitigate the impact of Covid-19 across Africa.
“This bond highlights the important role that social and sustainability bonds can play in directing funding to those countries, sectors and people across the world heavily impacted by this pandemic.”
The Bank established its Social Bond framework in 2017 and raised the equivalent of US$5 billion through issuances denominated in US dollars, Euro and Norwegian krone.
AfDB president Dr Akinwumi Adesina said his institution was proud to announce their first listing on LSE was a social bond.
“This is only the beginning of a stronger partnership between the African Development Bank and London Stock Exchange.
“We will mobilise all we can on the capital market to fight the coronavirus in Africa,” he said.
The Bank’s previous activity in the social bond market has seen financing to build hospital capacity, boost access to health and healthcare services, strengthen health systems, provide improved access to water and sanitation, and create jobs across the continent.
It is estimated that Africa would require billions of dollars to cushion itself against the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in efforts to contain it.
Across the world, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession.
— @okazunga
Online Reporter