AfDB Launches USD Sustainable Hybrid Capital

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by KnowESG
KnowESG_AfDB Launches USD Sustainable Hybrid Capital
Image courtesy of AfDB

The African Development Bank (AfDB) is set to issue its first-ever global benchmark sustainable hybrid capital.

The instrument has been assigned an AA- rating by S&P Global Ratings, the highest rating for hybrid capital. The transaction will be issued in a sustainable bond format and will finance a combined portfolio of eligible green and social projects.

The AfDB has mandated BNP Paribas and Goldman Sachs International as joint structuring agents and global coordinators. Barclays, BNP Paribas, BofA Securities, and Goldman Sachs International have been mandated as joint bookrunners. The banking institutions will arrange a series of global fixed income investor calls and meetings, commencing on Friday, September 15.

Hybrid capital is a type of debt that has some characteristics of equity. It is more expensive than traditional debt, but it also offers investors a higher return.

The AfDB's hybrid capital will be used to boost the bank's capital base and allow it to issue more green and social bonds. This will help the bank finance projects that address some of the continent's most pressing development challenges, such as food security, access to water and sanitation, health services, and climate change.

The AfDB's hybrid capital transaction is a landmark event. It is the first time a multilateral development bank has issued this type of instrument. The transaction is expected to open new opportunities for the AfDB and other multilateral development banks to raise capital from private investors. This will help them increase their lending capacity and support sustainable development in Africa.

Click here to download AfDB's Sustainable Bond Framework

Click here to learn more about the hybrid capital transaction

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Source: AfDB

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