Confronting COVID-19 through the capital markets

The African Development Bank took decisive action to issue a landmark COVID-19 social bond – and turned to London Stock Exchange to help access a global investor base


of orders for AfDB’s $3 billion COVID-19 bond

“This is only the beginning of a stronger partnership between the African Development Bank and London Stock Exchange”

President of the African Development Bank Akinwumi Adesina

As the COVID-19 pandemic began to spread across Africa in March 2020, it became clear that it was set to cause significant economic damage on the continent – and that the African Development Bank (AfDB) would need to act decisively. Its response was the issuance of its $3.1 billion “Fight COVID-19” social bond, the largest social bond ever issued at the time, and the institution’s largest US dollar benchmark.

The proceeds from the bond will fund in part AfDB’s sovereign and private sector projects that will be approved under the Bank’s $10 billion COVID-19 Rapid Response Facility (CRF), which provides flexible emergency assistance to member countries to help shore up national budgets, protect their economies and support livelihoods under threat.

Moving fast to tackle COVID-19

The Bank was able to move quickly, issuing the bond in March under its existing social bond framework, and received a strong response among traditional and socially responsible investors.

The three-year bond generated orders in excess of $4.6 billion and, among the 95 investors that participated in the transaction, 21 were new investors for the Bank, a testimony of investor confidence in AfDB as an issuer and strong support of the Bank’s mission for a better world on the African continent.

“We are thankful for the exceptional level of interest the Fight COVID-19 Social Bond has raised across the world,” said Hassatou Diop N’Sele, Treasurer, African Development Bank. “Our social bond programme enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause.”

London supports the fight against COVID-19

The bond, and a follow-up SEK 2.5 billion 3-year equivalent COVID-19 bond targeted at Scandinavian investors, were both listed on London Stock Exchange, and were made available to secondary market investors via London Stock Exchange’s Sustainable Bond Market.

It allows qualifying bonds to be listed alongside the required bond reporting and certifications. It is designed to meet investor requirements for greater and consistent disclosures relating to sustainable bonds, while helping issuers tap into international liquidity.

Investors in green and social bonds typically expect issuers to report on how the proceeds have been used and, specifically, what impact has been delivered. Here, AfDB plans to report in 2021 on metrics including the percentage of the population of recipient countries that have been tested for COVID-19, the number of additional health personnel recruited, the number of intensive-care beds provided, and the number of enterprises and individuals supported with tax relief or cash transfers.

“This is only the beginning of a stronger partnership between the African Development Bank and London Stock Exchange,” said President of the African Development Bank Akinwumi Adesina. “We will mobilise all we can on the capital market to fight COVID-19 in Africa.”