The African Development Bank, AfDB, has launched its largest financial package worth $3 billion, (approximately FCFA 1.8 trillion), in bonds, to assist African economies in the fight against the deadly Coronavirus.
“This is the largest dollar-denominated social bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%,” stated AfDB in a release on Sunday, March 29, 2020.
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The three-year social bond, which has been termed “exceptional” in the institution’s history, will help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies according to the AfDB authorities.
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 the bank’s management, the African Development Bank Group 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. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest dollar social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.
“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank 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,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.
Although the Coronavirus came to Africa lately, it is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems.
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The African development bank has disclosed that the “Fight COVID-19” social bond has allocated to central banks and official institutions (53%); bank treasuries (27%) and asset managers (20%).
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, thus driving many economies toward recession.
The African Development Bank established its Social Bond framework in 2017 and raised the equivalent of $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the AfDB was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.
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By Hope Nda, First published by The Post Newspaper, Cameroon.
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