AfDB issues 2.5 billion dollar bond

The African Development Bank (AfDB) issued a 2.5 billion dollar bond on October 21, receiving 4.8 billion dollars in subscription orders, more than double the amount it sought. The bond is set to mature on January 18, 2030, and includes an annual interest rate, or coupon, of 4.875%.

Bond offers favorable terms

The AfDB was able to set its interest margin at 28 basis points above the reference SOFR swap rate, lower than the initially planned 30 basis points. SOFR swaps are financial contracts that allow parties to exchange fixed interest rates for variable rates tied to the SOFR, a benchmark for daily financing costs in the U.S. Treasury-backed pension fund market.

Investor confidence reflected in yields

The yield on the AfDB bond is just 8.7 basis points, or less than 0.09 percentage points, above that of a comparable U.S. Treasury bond. This small difference highlights the confidence investors have in the financial stability of the AfDB, despite it not holding an AAA rating from major credit agencies.

Financing conditions near top banks

The AfDB’s financing terms are similar to those of major multilateral development banks. Recently, the World Bank raised 5 billion dollars with a yield of 4.974%, and the International Finance Corporation, a World Bank affiliate, placed 2 billion dollars with a margin of 29 basis points above the same reference rate.

Subscription by global investors

The new AfDB bond was mostly subscribed by banks, which accounted for 48% of the allocations. Central banks and other official institutions took 39%, while asset managers received the remaining 13%. Geographically, Europe, the Middle East, and Africa accounted for 54% of the subscriptions, followed by the Americas and Asia.

Third major bond in 2026

This is the third major dollar bond issuance by the AfDB in 2026, following two earlier transactions of 1 billion and 2 billion dollars in January and February. The final settlement of this new bond is scheduled for November 2.