AfDB unveils $600 million Kangaroo Social Bond

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Factual Pursuit of Truth for Progress

 

A $600 million (US$463.9 million) 5.5 year Kangaroo bond has been launched by the African Development Bank (AfDB), marking its return to the Australian dollar bond market to support its mandate.

Note that a Kangaroo bond is a foreign bond issued in the Australian market by non-Australian firms and is denominated in Australian currency. The bond is subject to the securities regulations of Australia. A Kangaroo bond is also known as a ‘matilda bond.’

This was disclosed in a statement on Monday in which it said the transaction, which was led by Nomura and RBC Capital Markets, is part of AfDB’s social bonds.

According to reports, the proceeds will go into projects that alleviate or mitigate social issues such as improving access to electricity, water and sanitation.

It also channels fund to improving livelihoods through flood-risk reduction and access to clean transportation and employment generation.

Meanwhile, it is the institution’s first benchmark Kangaroo since early 2018 and its first in the mid-curve since 2015. It is also the largest AUD trade ever issued by the Bank.

More than 30 investors participated in the deal, with a total order book of more than A$775 million, leading to an upsize of the trade from the announced size of A$250-300 million to the final size of A$600 million.

These included a strong cohort of Australian investors, while fund managers were the major investor type.

African Development Bank Treasurer, Hassatou N’sele, said the Covid-19 pandemic had led to a rise in global issuances of social bonds.

“Following on from the ground breaking USD$3.1 billion 3 year ‘Fight Covid-19′ Social Bond we issued in 2020, we’re glad to see that public domestic markets, like the Kangaroo bond market, are now seeing similar development in terms of interest from dedicated ESG investors, which provided additional momentum enabling us to print the largest trade we’ve ever done in AUD,” N’sele added.

The African Development Bank’s social bonds have use of proceeds allocated to projects that alleviate or mitigate social issues such as improving access to electricity, water and sanitation, and improving livelihoods through flood-risk reduction and access to clean transportation and employment generation.

Recent data revealed that the African Development Bank had A$1.75 billion of bonds mature between its 2015 benchmark deal and its most recent.

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