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On Monday 07th June 2021, Agence Française de Développement (AFD), rated AA / AA (S&P / Fitch) (Stable / Negative) successfully launched a new EUR 1.5 billion SDG bond maturing on November 25th 2028. This marks AFD’s second EUR benchmark for the year as well as the second Sustainability transaction issued under the new SDG Framework since its launch in autumn 2020.
As a reminder, the SDG issuance framework replaced the climate framework set up in 2014, in order to broaden the universe of eligible loans to social expenditures and further enhance the Group’s active contribution towards the Sustainable Development Goals.
This 1.5 billion euros Long 7-year transaction (maturing on November 25th 2028), offered a spread of 18 basis points over the OAT 0.750% 25/11/2028. On the back of a stable market backdrop and limited competing supply, this transaction received a strong support from investors including dedicated ESG investors with final oderbooks in excess of EUR 2.75 billion (including 75 million JLM interest).
The proceeds will be used to finance and/or refinance eligible sustainable expenditures as set out in the SDG Bond framework.
The lead managers on this transaction were Barclays, BNP Paribas, Crédit Agricole CIB, HSBC and Société Générale.
Execution Details
On Friday June 4th 2021 at 10:30 am CET, AFD announced the mandate for a new long 7 year SDG benchmark transaction along with a series of investor calls.
On Monday 7th June 2021, the orderbook opened at 08:56 am CET, with the initial guidance going out at 20 basis points area over the OAT 0.750% 25/11/2028.
The first update was provided to the market at 10.39 am CET with a spread set at 18 basis points above the OAT 0.750% 25/11/2028 representing a 2bps tightening from initial guidance and books exceeding 1.9 billion euros (excluding JLM interest).
At 11:45 am CET, the orderbook closed in excess of 2.75 billion euros (including 75 million JLM interest) consisting of more than 85 accounts.
The new sustainability transaction was priced at 14:42 CET with a yield of 0.029% and a spread of OAT+18 basis points.
For Thibaut Makarovsky, Head of funding and market operations at AFD: “Through this operation, the AFD Group, as a development bank, is once again demonstrating its commitment to the SDGs in implementation of the UN’s Agenda 2030, as well as its willingness to promote a sustainable finance. Investors once again responded in numbers as a proof of their confidence, which allowed us to lower the spread at OAT + 18 bps during execution, the tightest level for a public euro denominated benchmark bond issued by the AFD since January 2017. This sustainable bond is the second since the release of the AFD’s new SDG bond framework, and its size – EUR 1.5 billion – demonstrates the desire to strengthen the liquidity of all AFD securities”.
Transaction details
Issue expected ratings : AA/ AA (S&P/ Fitch)
Status : PSPP PEPP eligible
Format : Senior Unsecured, RegS Bearer Dematerialised form
Coupon : 0.010%, ANN, ACT/ACT
Size : € 1.5 billion
Pricing Date : 07/06/2021
Settlement Date : 11/06/2021 (T+4)
Maturity Date : 25/11/2028 (Long 7 year)
Re-offer Price : 99.858%
Re-offer Yield : 0.029%
Re-offer Spread vs OAT : + 18 bps
Lead Managers : Barclays, BNP Paribas, Crédit Agricole CIB, HSBC, Société Générale
ISIN : FR0014003YN1
Orderbook : € 2.75 billion (incl. 75m JLM interest)
Distribution statistics
Contact: _AFD_Funding@afd.fr