Final terms of the transaction

Issuer

African Development Bank, rated Aaa / AAA/ AAA (Moody's / S&P / Fitch)

Principal Amount

USD 500,000,000

Pricing Date

December 9, 2015

Settlement Date

December 17, 2015

Maturity Date

December 17, 2018

Re-Offer Price/Yield

99.903% / 1.408%

Coupon

1.375% (semi-annual, 30/360)

Spread vs. MS

+14bps

Spread vs. UST 1.250% due 15 December 2018

+18.15bps

Denominations

USD 1,000 or any integral multiple

Documentation

Issuer's Global Debt Issuance Facility

Listing

Luxembourg Stock Exchange (Regulated Market)

ISIN

US008281BB25

Joint Bookrunners

Barclays, Crédit Agricole CIB, Deutsche Bank

Context of the transaction

On Wednesday, December 9, 2015, the African Development Bank (AfDB) rated Aaa / AAA/ AAA by Moody's / S&P / Fitch (all stable) successfully launched a USD 500-million 3-year Green Bond transaction due December 2018. The issue priced at Mid-Swaps plus 14 bps, equivalent to a spread of 18 bps over the UST 1.250% December 2018. This represents AfDB's return to the USD Green Bond market following two successful Swedish Krona transactions executed in 2014 and its USD 500 million 3-year Green Bond issued in October 2013. AfDB took advantage of global focus on the COP21 conference taking place in Paris to highlight its commitment to leveraging climate finance to support African countries in their adaptation and transition towards green growth. As described in its Green Bond framework reviewed by Cicero, the proceeds of the Green Bond will support the financing of low carbon and climate resilient projects in line with AfDB's Ten Year Strategy. Eligible projects to be financed by the bond include climate change mitigation and adaptation projects in the field of renewable energy generation and energy efficiency; biosphere conservation; waste management; fugitive emissions and carbon capture; urban development and low carbon transport or water supply and access.

Launch and execution process

The transaction was announced on Tuesday, December 8 at noon London time under challenging market conditions given the recent volatility in US treasuries and swap spreads. Shortly after, Initial Pricing Thoughts for a USD 500-million 3-year Green Bond were released at Mid-Swaps plus 14 bps area.

Solid interest from European and US real money accounts committed to Green started to be reflected in the books from the outset. Books opened at 8 am London time on Wednesday, December 9 for a USD 3-year benchmark at a spread of Mid-Swaps plus 14 bps, with indications of interest already in excess of USD 450 million. Momentum continued into the London morning with the book growing above USD 500 million by 11 am London time.

Books closed at 2:30 pm London time, in excess of USD 600 million, and soon after the transaction was launched with a USD 500 million size at Mid-Swaps plus 14 bps.

The second USD 500-million 3-year Green Bond issue from the African Development Bank was priced at 6:30 pm London time with a spread of Mid-Swaps plus 14 bps in line with guidance, equivalent to a spread over the UST 1.250% December 2018 of 18 bps. The transaction came with an unusually tight new issue premium of 1 bp. The high participation of investors, who integrate environmental considerations within their investment strategy, and who bought almost 70% of the bond, reflects their strong support to the AfDB Green Bond framework and commitment to this market.

The final book saw the participation of 32 different accounts including AP2, BlackRock, Raiffeisen Capital Management, State Street Global Advisors (SSgA), TIAA-CREF Asset Management and Zürcher Kantonalbank Asset Management.

With respect to investor type breakdown, Central Banks and Official Institutions took the lead with 39%, followed by Asset Managers with 34%, Insurance and Pension Funds with 25% and the remaining 3% went to Bank Treasuries. By geography, the Americas took 53%, followed by Europe with 24%, Asia with 14% and the remaining 10% went to Africa.

"We recognize that climate change is one of the biggest threats to the success of the AfDB Group development mandate for Africa, and this is why environment and climate change are mainstreamed in all our activities. We have invested more than USD 7 billion in climate finance over the past four years, and are committed to triple our annual climate financing to reach USD 5 billion a year by 2020. We have a strong green bond framework and are committed to help Africa gradually transition to green growth." - Hassatou N'Sele, Treasurer, AfDB

"After completing two very successful USD benchmark transactions in 2015, this was a great way to finish off the year. Our dedicated green investor base again showed their strong support for AfDB's role in helping African countries to address climate change, and it was perfect considering the backdrop of the COP21 conference taking place in Paris." - Keith Werner, Chief Treasury Officer, AfDB

"Barclays are honoured to work on this important transaction and contribute to AfDB's successful return to the US$ Green Bond market. With this new 3-year, AfDB not only highlights the depth (and growing) demand for Green Bonds but also their institution's role in the development of sustainable debt capital markets and contribution in addressing climate change in Africa."- Susan Barron, Managing Director, SSAR Origination, Barclays

"With this new green bond, AfDB positioned themselves as one of the market leaders in this fast growing asset class. The issuer's strong green bond framework and also their ability to engage the market in an efficient manner has generated a very positive reception from the green investor community. Crédit Agricole CIB is proud to have been involved in such a successful transaction." - Benjamin Moulle, Managing Director, Head of SSA Syndicate, Crédit Agricole CIB

"This was a landmark transaction for the African Development Bank as it was only the issuer's second ever USD Green Bond. The issuance was timed perfectly to take advantage of the ever-growing Green Bond market and to coincide with the Global COP21 climate change conference in Paris. The high quality, oversubscribed orderbook attracted new investors, proving that the African Development Bank is a highly credible and desired name globally. Deutsche Bank were honoured to be part of such a phenomenal transaction." - Steven Jallport, Director - Supra, Sovereign and Agency Origination, Deutsche Bank

Distribution stats

Investor Type Geography

Central Banks & OIs 38% Americas 52%

Asset Managers 34% Europe 24%

Insurances & Pension Funds 25% Asia 14%

Bank Treasuries 3% Africa 10%