African Development Bank Launches First ESG African Frontier-Currency Bond

The African Development Bank on 14th 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 African Development Bank 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.

Keith Werner, African Development Bank Division Manager for Capital Markets and Financial Operations, said: “The African Development Bank is very pleased to collaborate with Standard Chartered Bank and Capitulum Asset Management to launch this inaugural African frontier currency ESG transaction, contributing to our High-5 development priorities while extending our investor reach in Europe.”

Under its Feed Africa strategy, the Bank 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.”

Dain Sherborne, head of EM SSA Bond Trading and Annemarie Ganatra, head of MTNs at Standard Chartered Bank, said: “We are delighted that our core strengths in African markets have enabled us to arrange this ‘Feed Africa’ theme bond issuance for AfDB. We look forward to continuing to strengthen our partnership with multilateral development banks to help them achieve their common goals.”