The West African Development Bank’s (BOAD’s) $500 million sustainable hybrid bond has been successfully concluded with a final oversubscription ratio of 3.4X, justifying the development finance institution’s growing investor confidence in the global capital market.
The bond carries a 30-year maturity with a five-year non-call period, for an equivalent EUR coupon rate of 5.9% and strong investor confidence drove the bond’s tightening by 37.5 basis points from its initial price offering, resulting in an impressive $1.9 billion order book reached over the day and a final oversubscription ratio of 3.4X.
A news report from the African Press Organisation (APO) circulated on behalf of the development finance institution of the member-countries of the West African Monetary Union (WAMU) indicated that prior to the issuance of the bond, BOAD had already secured $204 million in private placements with the Arab Bank for Economic Development in Africa (BADEA) and Cassa Depositi e Prestiti (CDP) in December 2023 and August 2024, respectively.
Rated Baa3 by Moody’s and recognized with 50% equity content by both Moody’s and Fitch, the inaugural public issuance allows BOAD to outperform its $600 million hybrid bond objective, achieving 95% of its capital increase objective as part of the Djoliba Strategic Plan.
The $500 million hybrid bond issuance, which attracted significant and diversified investors driven by the strong credit profile of BOAD and the characteristics of the structure, enabled the bank to add additional equity-like capital to its liabilities, bringing its equity-to-assets ratio to 41.7%.
In terms of geographical distribution, UK investors represent 44% of the allocation, followed by Switzerland 20%, US 13%, Middle East 3%, Asia 2% and the rest of Europe 19%.
When analysed based on investor type, Asset Managers accounted for 69% of the allocation, followed by Hedge Funds’ 20%, Banks/Private Banks’ 6% and Pension Funds/Insurance allocation of 5%.
According to the terms of the offer, the proceeds will be allocated to financing or refinancing eligible Green and Social projects under BOAD’s Sustainability Bond Framework, reinforcing the bank’s commitment to climate action and social progress across the West African Economic and Monetary Union (WAEMU) region.
This transaction has further strengthened the development finance institution’s capitalization and fast-tracked the objectives of its Djoliba Strategic Plan, solidifying its role as a key driver of sustainable economic growth and improved living standards in West Africa.
Commenting on the successful bond issuance, President and Chairman of the Board of the bank, Mr. Serge Ekué, enthused: “This groundbreaking transaction is a testament to investor confidence and underscores the BOAD’s commitment to innovation as a key driver of development. By mobilizing additional funds, we are strengthening our capacity to finance impactful projects across our member countries, fostering sustainable growth and economic resilience.”
He expressed his sincere gratitude to the bank’s advisors Rothschild & Co and Galite, and to BNP Paribas, Société Générale, HSBC, JP Morgan and SMBC.”
