The African Development Bank (AfDB) has recently announced a series of investor calls and meetings in New York, London, and Paris. These meetings, scheduled to commence on Friday, 15th September, are in anticipation of an inaugural USD Global Benchmark Sustainable Hybrid Capital transaction.
A New Era of Sustainable Financing
This transaction is a significant milestone in sustainable financing. It will be issued in a Sustainable Bond format under the Bank’s newly established Sustainable Bond Framework. The funds raised will finance a combined portfolio of eligible green and social projects.
In July, S&P Global Ratings assigned an AA- rating to the proposed instrument, marking it as the highest rating for hybrid capital. This high rating signifies the strong financial position and credibility of the AfDB.
The Role of Banking Institutions
BNP Paribas and Goldman Sachs International have been mandated as Joint Structuring Agents and joint Global Coordinators. Additionally, Barclays, BNP Paribas, BofA Securities, and Goldman Sachs International will serve as Joint Bookrunners. These banking institutions will play a crucial role in arranging global fixed-income investor calls and meetings.
The Impact of Hybrid Capital
Hybrid capital is set to revolutionize the Bank’s financing. It will enable the issuance of additional green, social, and sustainability bonds to finance projects targeting some of Africa’s most critical development challenges. These include food security, access to water and sanitation, health services, and climate change.
Hassatou N’Sele, Vice President, Finance and Chief Financial Officer at the African Development Bank, stated that this hybrid capital transaction would open new opportunities for the Bank and other AAA-rated multilateral development banks to boost lending by tapping private investors.
The African Development Bank’s move towards hybrid capital signifies a new era in sustainable financing. By optimizing its balance sheet and enhancing its capital base, the AfDB is not only addressing Africa’s most pressing development challenges but also pioneering a new asset class in the financial sector.