Key aspects of the transaction:
With this new transaction, AFD becomes the first French Agency to issue a sustainable bond on the USD market. This is also its second USD issuance with a 5-year maturity and its 7th syndicated transaction of the year, following the EUR400m 15yr earlier this week. The transaction confirms AFD's ability to promote its signature, finance itself in multiple formats and diversify its investor base.
The proceeds will be used to finance or refinance Eligible sustainable expenditures as set out in the Agency’s SDG Bond Framework. AFD’s Sustainable Finance Framework, aligned with ICMA’s Green Bond Principles (GBP), Social Bond Principles (SBP) and Sustainability Bond Guidelines (SBG), has been reviewed by Vigeo Eiris. The eligible Green & Social projects are all in line with the UN SDGs.
This $1.25bn transaction offers a final spread of 61 basis points over the SOFR curve, equivalent to a reoffer yield of 4.039% (s.a.) and a reoffer price of 99.646%.
The joint lead managers for this transaction are Barclays, BNP Paribas, Goldman Sachs, HSBC, JP Morgan.
Execution and distribution:
Despite a still very volatile market environment (central bank narrative, inflation and rising energy costs dominating the headlines) and a worse-than-expected CPI number, AFD decided to seize this opportune market window to move forward in announcing on Tuesday September 13th the launch of its inaugural sustainability US dollar denominated bond. After the announcement of this transaction with a 5-year maturity, the IPT were communicated at 62 basis points area above the SOFR MS at 16.01 CET.
On Wednesday 14th, the orderbooks for this new trade officially opened at 09.13 CET with IOIs in excess of $1.3bn (incl. $150m JLM) from high quality investors, with particular attention brought to the sustainable format of the issue. The guidance was set at SOFR MS+62 bps area. At 12.32 CET, the orderbooks exceeded $1.9bn (incl. $150m JLM), allowing the AFD to set the final spread for the transaction at 61 basis points above the SOFR MS.
Books closed at 14.00 CET in excess of $1.8bn (incl. $150m JLM) which enabled to launch the deal and set the size at $1.25bn at 14.11 CET.
Allocations were released to the market at 15.20 CET and the transaction was priced at 16.09 CET with a coupon of 4.000% and a reoffer yield of 4.039% s.a.
In terms of allocation by type of investor, the distribution of this inaugural sustainable dollar transaction benefitted from a high quality demand – 61% allocated to Central Banks/ Official Institutions, 33% to Banks and 6% to Asset managers & Others.
Geographic distribution highlighted the strong presence of AFD's signature on the international capital markets with a good balance between European jurisdictions (34%), America (29%), Asia/Oceania (20%), complemented by some demand from UK (10%) and MEA (7%)
Thibaut Makarovsky, Head of Funding and Market Operations at AFD: “We are very proud of the success of this first ever USD Sustainability Bond issued by a French Agency despite challenging markets. We would like to thank very much the USD investors participating in this transaction for their trust. Re-accessing the 5-year tenor in USD also underscored the progress AFD has made over the past few years with investors, becoming a well-recognized issuer in USD SSA market. Having access to this additional investor base, helps AFD in achieving our funding plan at optimal conditions”
- Issuer: Agence française de développement
- Ratings: AA (S&P, stable) / AA (Fitch, negative)
- Size of the transaction: USD 1.25 billion
- Settlement date: 21 September 2022
- Maturity date: 21 September 2027
- Reoffer price: 99.646% s.a.
- Coupon: 4% Fixed, Annual, 30/360
- Reoffer yield: 4.039% s.a.
- Reoffer yield: 61 basis points
- Listing: Euronext Paris
- Joint Lead Managers: Barclays, BNP Paribas, Goldman Sachs, HSBC, JP Morgan
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