…Largest-ever transaction in int’l debt capital markets
…Second time Bank accessed the 144A US market
Ben Eguzozie, in Port Harcourt
Africa’s financial behemoth, African Export-Import Bank (Afreximbank) successfully closes a US$1.3 billion dual tenor bond issuance, the Bank’s largest-ever transaction in the international debt capital markets.
Afreximbank printed a US$600 million 5-year note at a spread of T+185bps and a US$700 million 10-year note at a spread of T+220bps, after achieving a final order book of US$4.5 billion, statement from the Bank says.
The Initial Pricing Thoughts (IPTS) were announced at T+220bps area and T+250bps area for the 5-year and 10-year tranches, respectively. Backed by strong demand, the combined books peaked at US$5 billion, with a slight skew towards the 5-year tranche, seeing pricing set at T+185 bps to a re-offer yield of 2.634% and T+220bps to a re-offer yield of 3.798%, respectively. The 10-year tranche was finally priced at only a 5bps New Issue Premium (NIP), while the 5 year was priced flat to fair value.
Afreximbank Advisory and Capital Markets (ACMA) acted as Sole Financial Advisors on the transaction, while Afreximbank partners in arranging the transaction were HSBC Bank plc as Sole Coordinator and Joint Lead Manager/Book Runner as well as MUFG, Emirates NBD Bank PJSC, Commerzbank and Standard Chartered Bank as Joint Lead Managers and Book Runners.
The transaction is a major milestone for Afreximbank, marking the second time that the Bank has accessed the 144A US market and is the Bank’s largest transaction in the debt capital markets to date. It fulfils a number of key objectives of the Bank’s Liability Management strategy, which include diversification of the liability book by geography, investor type and tenor as well as reducing cost of funds.
Speaking after the closing, Denys Denya, Afreximbank’s Executive Vice President responsible for Treasury, says: “This landmark deal confirms continuing investor deep confidence in Afreximbank’s mission and credit story, and achieving competitive pricing for both tranches is testament to the strength of support from investors from all key financial markets across the global. Importantly, the success of this transaction enables the Bank to continue to play a major role in the development of intra-African trade as well as trade between Africa and the rest of the world.
“The closing of the transaction is evidence of the Bank’s growing capability to harness competitively priced long dated resources into Africa and fund investments that will have a positive impact on trade in the continent.”
Prior to pricing the transaction, Afreximbank met with both new and existing investors during well-attended virtual roadshows covering the Africa, Gulf countries, Europe, Asia and USA. The Bank received overwhelmingly strong feedback, noting confidence in Afreximbank’s credit profile and strategy. Investors also complimented the Bank in helping its member countries adjust to the shocks caused by the COVID-19 pandemic, through its Pandemic Trade Impact Facility (PATIMFA).
Afreximbank is a pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. It deploys innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. The Bank’s rich history of intervening in support of African countries in times of crisis such as the Pandemic Trade Impact Mitigation Facility (PATIMFA) launched in April 2020, where the Bank has disbursed more than US$6.5 billion in 2020 to help member countries manage the adverse impact of financial, economic, and health shocks caused by the COVID-19 pandemic.
A prime promoter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has completed the development of a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. It is working with the AU and the AfCFTA secretariat to develop an adjustment facility to support countries in effectively participating in the AfCFTA.
At the end of 2020, Afreximank’s total assets and guarantees stood at US$21.5 billion, and its shareholder funds amounted to US$3.4 billion. The Bank disbursed more than US$42 billion between 2016 and 2020. It has ratings assigned by GCR (international scale) (A-), Moody’s (Baa1) and Fitch (BBB-). The Bank is headquartered in Cairo, Egypt.