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AfDB Launches First ESG African Frontier-Currency Bond

The African Development Bank (www.AfDB.org) 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 in 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 while Capitulum Asset Management was the investor.

According to a press release circulated on behalf of the development finance institution by the African Press Organisation (APO) Group, the AfDB 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.

Speaking on the bond issuance, AfDB’s Division Manager for Capital Markets and Financial Operations, Keith Werner, 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.”

Also in his remarks, Fund Manager at Capitulum Asset Management, Theodor Kirschner, 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.”

This is even as head of EM SSA Bond Trading and head of MTNs at Standard Chartered Bank, Dain Sherborne, enthused: “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.”

Under its Feed Africa strategy, the Bank is working to contribute to reduce poverty; end hunger and malnutrition; make Africa a net food exporter; and move Africa to the top of export-orientated value chains where it has a comparative advantage.

The overall goal of the strategy is to make Africa a net food exporter by 2025.

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