The African Development Bank (AfDB) said it has successfully launched an AUD 155 million 10.5-year Kangaroo Social Bond, due October 2032, marking its first social bond transaction of the year.
Daiwa Capital Markets Europe Limited, which acted as a sole lead manager arranged the transaction, which the Bank said was launched on Thursday 14 April.
A Kangaroo bond is a foreign bond issued in the Australian market by non-Australian firms and is denominated in Australian currency, and the bond is subject to the securities regulations of Australia. A Kangaroo bond is also known as a “Matilda bond.”
This is the Bank’s second social bond in the Australian dollar market, following an inaugural AUD Social Kangaroo issued in June 2021, and the first AUD Social Kangaroo exclusively issued to institutional investors in Japan.
Two Japanese insurance companies, Meiji Yasuda Life Insurance Company, and Asahi Mutual Life Insurance Company participated in the deal.
Justifying the bond issuance, the AfDB said “Africa is an importer of food from both Ukraine and Russia, especially wheat and maize, and the current geopolitical instability has led to a worsening of the flood situation on the continent. Combined with the rise in energy prices, this is especially distressing for the continent’s most vulnerable communities.
“By issuing social bonds to finance socio-economic development in its regional member countries, the Bank is advancing its mission and strategy to spur sustainable economic development and social progress in Africa. It is also capitalizing on its track record of financing projects with strong social impact on the African continent.”
It explained further that the “proceeds from the Bank’s social bonds are allocated to eligible projects that will have significant social impact and outcomes, leading to poverty reduction and inclusive growth in Africa.
“This is expected to bring socio-economic development and empowerment including solving food insecurity, improving access to basic infrastructure (electricity, water and sanitation, transportation), basic services (medical, education, vocational training), financial services, and job creation”.
The Australian dollar is the fifth currency in which the African Development Bank has issued social bonds since the establishment of its Social Bond Programme in 2017, and this follows successful deals denominated in Euros, US dollars, Norwegian kroner and Swedish kronor.
The AfDB reiterated that the success of this AUD transaction is reflective of the Bank’s solid social bond framework and the high quality of its impact reporting.
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