Agence Française de Développement launches Inaugural US$ 600 million 3-year SOFR FRN RegS Benchmark due 19 November 2024

On Wednesday 10th November 2021, the Agence Française de Développement (AFD), rated AA (S&P) / AA (Fitch) successfully launched a US$ 600 million 3-year Floating Rate Note (“FRN”) Reg S benchmark public offering due 19th November 2024. This landmark transaction marks AFD inaugural SOFR Floating Rate Note, along with the first French Agency SOFR FRN Notes ever issued.

The 3-year US$ transaction was announced at 12:30 CET on Tuesday 9th November, with initial price thoughts of SOFR + 22bp area. The transaction met robust interest from the outset. The investor base, mostly comprised of Bank Treasuries, Central Banks and Insurance accounts, registered their interest before London close, despite a fairly busy primary market with issuances from other Agencies in US$.

Indications of Interest were in excess of US$ 525 million (excluding Joint-Lead Managers interest) when order books officially opened the following morning, shortly after 09:00 CET, with initial price guidance of SOFR + 22bps area.

The momentum in the book continued throughout the European morning, with orders in excess of US$ 575 million around 11:30 CET. At this time, the final spread was set at SOFR + 22bp allowing the issuer to confirm further interest from Asia and Europe.

Ultimately, the strong quality of the book enabled AFD to announce final terms at 14:30 CET with transaction upsized to US$ 600 million from US$ 500 million initially.

The transaction priced at 15:50 CET with a coupon of SOFR + 100bp, equivalent to a price of 102.365 %.

The distribution by investor type and geography was as follows: 54 % with Bank Treasuries, 29 % with Central Banks and Official Institutions, and 17 % of the bonds were placed with fund managers. In terms of geographic distribution, 62 % went into the Americas, 31% was placed in the UK, 6 % in France and 1% elsewhere.

For Thibaut Makarovsky, Head of Funding and Market Operations at AFD: "With this transaction, AFD is one of the pioneer issuers on the SOFR floating rate market. AFD is also the first French agency to issue under this format. Despite a recently volatile market environment, and in a SOFR market that is still under construction, AFD has benefited from a positive reception of the transaction by investors. We were able to issue US$ 600 million, which is a larger size than anticipated. We continue to demonstrate our commitment to the USD market, with an ability to issue in variable format despite the demise of Libor. This issuance also allows us to contribute to the animation of the derivatives market, tools that we use as part of our lending activity, of which a significant part is in USD.”

Transaction details:

Issue expected ratings: AA/ AA (S&P/ Fitch)
Format: RegS Bearer Dematerialised, Senior Unsecured
Coupon: FRN, SOFR+100bps, Quarterly, ACT/360
SOFR Conventio: SOFR Index where SOFR Index Start and SOFR Index End will be 5 days prior to Interest Period
Size: US$ 600 million
Pricing Date: 10th November 2021
Settlement Date: 19th November 2021 (T+6)
Maturity Date: 19th November 2024 (3-year)
Re-offer Spread: SOFR + 22bp
Re-offer Price: 102.365 %
Listing: Euronext Paris
Lead Managers: Credit Agricole CIB, Goldman Sachs Bank Europe SE, Morgan Stanley Europe SE
ISIN: FR0014006LE0
Final Orderbook Size: US$ 600 million at reoffer (excl. JLM interests)