African Development Bank launches first ESG frontier-currency bond
Summary
Standard Chartered Bank arranged the transaction under the Bank’s Global Debt Issuance Facility.
The African Development Bank (AfDB) on 14 June 2022 launched a 19-billion Ugandan shilling (UGX) ($5.07 million) 2-year theme bond, the first-ever African frontier currency-denominated environmental, social and governance (ESG) issuance by a multilateral development institution.
The bond, due June 2024, will be settled in dollars at a fixed coupon of 10.5%. It was issued under the AfDB Group’s ‘Feed Africa’ strategic High 5 and marks the Bank’s first offshore UGX bond issuance in 2022. Standard Chartered Bank arranged the transaction under the Bank’s Global Debt Issuance Facility. Capitulum Asset Management was the investor.
The Bank will direct funds equal to the net proceeds of the issue to lending projects that advance the ‘Feed Africa’ strategic priority, in accordance with its lending standards.
Under its Feed Africa strategy, the AfDB is working to (i) contribute to reduce poverty; (ii) end hunger and malnutrition; (iii) make Africa a net food exporter; and (iv) move Africa to the top of export-orientated value chains where it has a comparative advantage. Feed Africa’s overall goal is to make Africa a net food exporter by 2025.
Theodor Kirschner, Fund Manager at Capitulum Asset Management said: “Our participation in the African Development Bank’s Ugandan shilling bond funding the ‘Feed Africa’ program helps us to reach our goal to invest with a positive impact while providing an adequate yield in a frontier currency.”
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