The transaction represents AFD’s third EUR public benchmark of the year as well as the third Sustainability transaction under the SDG (Sustainable Development Goals) Bond Framework launched in October 2020.
As a reminder, this SDG issuance framework replaced the climate framework set up in 2014, in order to broaden the universe of eligible loans to social expenditures, and further enhance the Group’s active contribution towards the Sustainable Development Goals.
This €2 billion 10-year SDG transaction (maturing on the 29th of September 2031), offered a spread of 18bps over the interpolated French curve (OAT 0.00% 25/11/2030 & OAT 0.00% 25/11/2031).
The joint lead managers on this transaction were BofA Securities, BNP Paribas, Commerzbank, J.P. Morgan and Natixis.
AFD took advantage of a clear window in the EUR market, with far less issuance than the preceding week and announced a EUR 10-year SDG transaction at 13:00 CET on Tuesday September 21st.
Books formally opened on Wednesday September 22nd, with initial guidance released at 09:00 CET at OAT+21bps area over the interpolated French curve.
The transaction was favorably received by investors with books over €4.8 billion (incl. 150 million JLMs) within an hour and a half. The strong momentum enabled the AFD to revise guidance to OAT+19bps area (+/-1bp with the indication it will price in range) at 10.30 CET.
Demand continued to grow following the update with a number of high quality investors stepping into the orderbook, prompting the book to grow up to €7.4 billion (incl. 150 million JLMs) and allowing AFD to set the spread at OAT+18bps at 11:10 CET.
Despite the tightening, investors demand kept growing enabling the issuer to send the final terms at 11:50 CET with the size set at €2 billion. Final orderbook closed in excess of €8.2 billion at reoffer (incl. 150 million JLM), the largest ever for an AFD transaction.
The transaction priced at 14:55 CET with a coupon, of 0.125%, a re-offer yield of 0.179% and a re-offer spread of 18bps over the interpolated OAT curve.
The main part of the distribution by investor type and geography was as follows: 39% with Asset Managers, 30% with central banks and official institutions and 19% of the bonds were placed with Bank Treasuries. In terms of geographic distribution, 28% were placed in Germany/Austria/Switzerland, 19% went into UK, 18% in Asia and 11% in France.
For Thibaut Makarovsky, Head of Funding and Market Operations at AFD: “Investors once again expressed their interest in size in the Agence Française de Développement (AFD) name. The final orderbook, exceeding our previous record by far, with final demand in excess of €8.2 billion at reoffer coming from 160 investors, testifies of the transaction’s success. The 3bps tightening to the final spread set at OAT + 18bps (the same re-offer spread as the 7yr sustainable bond issued earlier in June, and the tightest level since 2017) highlights the credit recognition in our name. Therefore, we were able to increase the size up to €2 billion, the maximum we could issue, enhancing liquidity in our curve. Through this operation, the AFD demonstrates its commitment in the implementation of the United Nations Organization‘s 2030 Calendar and its willingness to promote a committed finance for SDG. This is the third sustainable bond since the publication of the new SDG Framework in October 2020, and the second this year, bringing the total volume of SDG issuance to 3.5 billion in 2021.”
- Issue expected ratings: AA/ AA (S&P/ Fitch)
- Format: Senior Unsecured, RegS Bearer Dematerialised
- Coupon: 0.125%, Fixed, Annual, ACT/ACT ICMA
- Size: €2 billion
- Pricing Date: 22nd September 2021
- Settlement Date: 29th September 2021 (T+5)
- Maturity Date: 29th September 2031 (10-year)
- Re-offer Price: 99.465%
- Re-offer Yield: 0.179%
- Re-offer Spread vs OAT: 18 bps (Over the interpolated French curve (OAT 0.00% 25/11/2030 & OAT 0.00% 25/11/2031)
- Lead Managers: BofA Securities, BNP Paribas, Commerzbank, J.P. Morgan, Natixis
- ISIN: FR0014005NA6
- Final Orderbook Size: €8.2 billion at reoffer (incl. 150 million JLMs)
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