The African Development Bank (AfDB) has raised $255 million through an issuance of social bonds denominated in Hong Kong dollars, coming just one week after it secured $2.5 billion in a separate international bond offering. The transaction forms part of the institution's broader strategy to diversify its funding sources across global capital markets.

Completed on 28 October and announced the following day, the issuance marks the AfDB's second public bond placement in the Hong Kong market, following an initial operation conducted in March. The new securities carry a five-year maturity, falling due on 6 November 2031, and offer an annual coupon rate of 4.143%.

Known in market parlance as a Wonton bond, the instrument involves the issuance of Hong Kong dollar-denominated securities in the local market by international entities, including foreign corporations and development finance institutions. The bonds were priced at par, meaning the issue price equalled face value, delivering an initial yield of 4.143% to investors.

Demand exceeded the AfDB's original fundraising target, enabling the bank to improve pricing terms. The institution had initially offered investors a spread of three basis points above Hong Kong's interbank reference rate, but strong appetite allowed that premium to be eliminated entirely.

Despite the robust overall demand, a significant portion of orders originated from the banks managing the transaction. Of the total HK$3.4 billion in orders recorded, HK$2.05 billion were submitted by the lead managers, with third-party investors accounting for the remainder.

The final allocation showed a heavy concentration among Hong Kong-based investors, who received 97% of the issuance. The remaining 3% was distributed to investors from other Asian markets. By investor type, bank treasury departments absorbed 91% of the bonds, while asset managers took the remaining 9%.

The issuance was arranged by HSBC, the UK-headquartered international banking group, and Standard Chartered, the British financial institution with a strong footprint across Asian and African markets. Settlement is scheduled for 6 November. The transaction builds on the AfDB's inaugural public offering of Hong Kong dollar-denominated bonds in March, when the institution raised funds through securities carrying an annual coupon of 2.615%.

The March issuance carried a tenor of three years and three months, shorter than the five-year maturity of the bonds now placed in the market. With this second Hong Kong transaction, combined with the recent $2.5 billion raising in the international market, the AfDB continues to broaden the range of its financing sources.

Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=556927