TheAfrican Export-Import Bank (Afreximbank) successfully closed a $1.3bn dual tenor bond issuance, on 10 May, making it the bank’s largest-ever transaction in the international debt capital markets.
Afreximbank printed a $600m five-year note at a spread of T+185bps, and a $700m 10-year note at a spread of T+220bps, after achieving a final order book of $4.5bn.
The Initial Pricing Thoughts (IPTS) were announced at T+220bps area and T+250bps area for the five-year and 10-year tranches, respectively.
Backed by strong demand, the combined books peaked at $5bn, with a slight skew towards the five-year tranche, seeing pricing set at T+185 bps to a re-offer yield of 2.634% and T+220bps to a re-offer yield of 3.798%, respectively. The 10-year tranche was finally priced at only a 5bps New Issue Premium (NIP), while the five-year tranche was priced flat to fair value.
The Afreximbank Advisory and Capital Markets (ACMA) acted as Sole Financial Advisors on the transaction, while the bank’s partners in arranging the transaction were: HSBC Bank plc as Sole Coordinator and Joint Lead Manager/Book Runner as well as MUFG; Emirates NBD Bank PJSC, Commerzbank, and Standard Chartered Bank as Joint Lead Managers and Book Runners.
The transaction is a major milestone for Afreximbank, marking the second time that it has accessed the 144A US market. It is also the bank’s largest transaction in the debt capital markets to date.
It fulfils a number of key objectives of the Bank’s Liability Management strategy, which include diversification of the liability book by geography, investor type and tenor as well as reducing cost of funds.
Speaking after the closure, Denys Denya, Afreximbank’s Executive Vice President responsible for Treasury, said, “This landmark deal confirms continuing investor deep confidence in Afreximbank’s mission and credit story, and achieving competitive pricing for both tranches is testament to the strength of support from investors from all key financial markets across the global.”
“Importantly, the success of this transaction enables the Bank to continue to play a major role in the development of intra-African trade as well as trade between Africa and the rest of the world,” he added.
The closing of the transaction is evidence of the bank’s growing capability to harness competitively priced long dated resources into Africa and fund investments that will have a positive impact on trade in the continent.
Prior to pricing the transaction, Afreximbank met with both new and existing investors during well-attended virtual roadshows covering Africa, Gulf Cooperation Council (GCC) countries, Europe, Asia, and the US.
The bank received overwhelmingly strong feedback, noting confidence in its credit profile and strategy. Investors also complimented the bank in helping its member countries adjust to the shocks caused by the novel coronavirus (COVID-19) pandemic, through its Pandemic Trade Impact Facility (PATIMFA).