African Development Bank’s USD 3 Bn Social Bond Is Now Listed On The London Stock Exchange

By  |  April 4, 2020

Last week, the African Development Bank (AfDB) raised what was the largest social bond to ever be issued in the capital markets. Now, the USD 3 Bn Fight COVID-19 facility has been listed on the London Stock Exchange (LSE).

This is an important milestone for the AfDB as the fund, which is now available via its Sustainable Bond Market, is the bank’s first bond on the LSE.

Recall that the transaction was overscribed and initially attracted USD 4.6 Bn of interest. It was unveiled to help African economies and livelihoods withstands the effects of the coronavirus pandemic.

The listing, which begins a partnership between the AfDB and the LSE, cements the fact that such bonds play a huge role in directing funding to affected countries, sectors and people significantly hit by big emergencies such as a pandemic.

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, London Stock Exchange has announced.

Such social and sustainability bonds fund essential services such as healthcare, water and sanitation, supporting employment, or with a link to the relevant UN Sustainable Development Goals.

Several high-quality ESG investors actively supported this remarkable transaction, including Affirmative Investment Management (UK), Breckinridge, Columbia Threadneedle (USA), 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 Program.

“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 Anne-Marie Trevelyan said 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,” Trevelyan further noted.

Nikhil Rathi, CEO, London Stock Exchange plc and Group Director of International Development, said: “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 USD 5 Bn through issuances denominated in US dollars, Euro and Norwegian krone.

The President of the AfDB, Akinwumi Adesina, said: “We are proud to announce that our first listing on London Stock Exchange is a social bond. This is only the beginning of a stronger partnership between the African Development Bank and London Stock Exchange. We will mobilize all we can on the capital market to fight the coronavirus in Africa.”

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.

Commenting on the listing, Martin Scheck, CEO of The International Capital Market Association or ICMA, said: “We believe Social and Sustainability Bonds can provide an immediately actionable channel for the market to finance projects that directly contribute to alleviating the social and economic impact of the Covid-19 crisis.”

Image: Openigo

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