Key aspects of the transaction:
With this new transaction, AFD has now issued 3 Sustainable bonds in 2022, following its inaugural USD Sustainable bond issued in September. This is also its second 10-year benchmark this year, coming after the €1.5bn 10-year Sustainable Bond issued in May. The transaction confirms the investor support to the AFD Sustainable Finance Framework, with high quality investor demand received amidst a challenging market backdrop.
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 EUR 1.2 billion transaction offers a final spread of 55 basis points over interpolated OAT curve (FRTR 2% Nov-2032 & FRTR 1.25% May-2034), equivalent to a reoffer yield of 3.568% and a reoffer price of 99.434%.
The joint lead managers for this transaction are Commerzbank, Crédit Agricole CIB, Morgan Stanley, NatWest Markets, and Société Générale.
Execution and distribution:
With limited windows for French Agency issuance and ongoing market volatility, AFD seized the supportive backdrop on Tuesday 11th October to move forward in announcing its new long 10-year EUR Sustainable Bond, due February 2033. On the morning of Wednesday 12th October, books were officially opened with guidance communicated at 55 basis points area over interpolated OAT (FRTR Nov ’32 & FRTR May ’34).
High quality investor demand was supportive throughout the morning, reaching over 1 billion before 11:00 CET and enabling a swift execution process. Books closed at 12:40 CET in excess of 1.3 billion (excl. JLM) which enabled to launch the deal and set the size at 1.2 billion at 13:22 CET. Allocations were released to the market at 13:41 CET and the transaction was priced at 14:11 CET with an annual coupon of 3.500% and a reoffer yield of 3.568%.
By Geography, this transaction underscores the strength of AFD’s presence both within and outside of Europe with 40.1% allocated for France, 14.2% for Benelux, 12.4% for Germany, Switzerland and Austria but also 8.4% for North America and 4.2% for Asia. In terms of allocation by investor type, high quality demand was central to this transaction with 56.4% allocated for Asset Managers, 25.8% for Central Banks and Official Institutions and 8.7% for banks and private banks.
Thibaut Makarovsky, Head of Funding and Market Operations at AFD: “We are very proud to again see such a strong investor reaction to our Sustainable bond issuance. In a busy pipeline for French Agency issuance, we would like to express our thanks to the AFD investor base in further supporting our ongoing funding under the SDG Bond Framework” .
- Issuer: Agence Française de Développement
- Ratings: AA (S&P, stable) / AA (Fitch, negative)
- Size of the transaction: EUR 1.2 billion
- Settlement date: 19 October 2022
- Maturity date: 25 February 2033
- Reoffer price: 99.434%
- Coupon: 3.500% Fixed annual, Act/Act (ICMA)
- Reoffer yield: 3.568%
- Re-offer Spread vs. OAT Interpolated MID OATs + 55 basis points
- Reference OATs: FRTR 2% Nov-2032 & FRTR 1.25% May-2034
- Listing: Euronext Paris
- Governing Law: French
- ISIN FR001400DCB7
- Joint Lead Managers: CACIB, Commerzbank, MS, NatWest Markets, Société Générale
The geographical breakdown was 40.1% for France, 14.2% for Benelux, 12.4% for Germany/Switzerland/Austria, 11.8% for UK, 9% for Others, 8.3% for North America and finally 4.2% for Asia.
By investor type, 56.4% was allocated to Asset Managers, 25.8% was allocated to Central Banks / Official Institutions, 8.7% for Bank Treasuries, 8.4% for Insurance and 0.7% to Others.
Find out more: Investors page