AFD Launches US$ 1 billion 3.125% 2-year RegS Benchmark due 30 June 2024

On 23rd June 2022, Agence Française de Développement (AFD), rated AA (S&P) / AA (Fitch) launched a US$ 1 billion 2-year Reg S Benchmark transaction due 30th June 2024. This is AFD's second US$ benchmark of the year, following their USD 1.5bn 3-year benchmark in January 2022.

At the beginning of the year, AFD announced an approved 2022 funding program target of EUR9bn equivalent. AFD is a regular issuer of public benchmarks in various currencies, focusing on short and medium tenors in USD benchmarks while issuing in longer tenors in EUR.

The 2-year US$ transaction was announced at 13.00 CET on Wednesday 22nd June, with initial price thoughts of SOFR Mid-Swaps + 22 basis points area. The transaction attracted strong interest from the outset, and a wide range of investors, mainly Central Banks and Official Institutions, registered their interest before London close.
Indications of Interest were in excess of US$ 1 billion (including $100m Joint-Lead Managers interest) when order books officially opened the following morning, around 09.00 CET, with initial price guidance of SOFR Mid-Swaps + 22bps area, unchanged from initial price thoughts.

We saw a volatile session in the European morning but this did not impact the orderbook which was in excess of US$ 1.1 billion at around 11.00 CET. At this time, the final spread was set at Mid-Swaps + 22 bp allowing the issuer to confirm further interest and set the size of the transaction at US$ 1 billion US$ at New York open. The transaction was launched at 14.45 CET.

The transaction priced at 16.08 CET with a coupon of 3.125% annual, a re-offer yield of 3.244% annual / 3.218% semi-annual, equivalent to a spread of +32.53 bp vs UST 2.500% 31/05/2024. The distribution by investor type and geography was as follows: 92% of the bonds were placed with Central Banks and Official Institutions, 6% with Banks/Private Banks, and 2% with AM/Insurance. In terms of geographic distribution, 33% was placed in Europe (excl. UK), 23% in Asia/Oceania, 17% in the Americas, 15% in the Middle East & Africa and 12% in UK.

The success of this transaction further strengthens AFD’s position as a key Agency borrower and demonstrates the issuer’s commitment to the international benchmark markets and broad investor audience.

Thibaut Makarovsky, Head of Financing and Market Operations declared : “We faced volatile market conditions once again for our new issuance but managed to place a USD transaction for the target size of US$1bn. The Central Banks and Official Institutions targeted on this deal, provided their support as soon as the transaction was announced. This highly volatile environment illustrates the change in market paradigm since the start of the year."

Transaction Summary: