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On Tuesday, 27 February 2024, Agence Française de Développement (AFD), rated AA (S&P) / AA- (Fitch) successfully returned to the USD market a new 5-Year USD 2Bn sustainable bond issue.
This offering marks AFD's third benchmark transaction this year after having issued on the sterling and euro markets in January, as well as its first sustainable benchmark of the year. This successful transaction represents AFD’s largest-ever orderbook on an USD new issue.
Key aspects of the transaction:
This USD 2 billion transaction offers a final spread of SOFR MS+ 52 basis points, equivalent to a reoffer yield of 4.558 % and a reoffer price of 99.519 %, for a coupon of 4.500 %. The transaction’s success confirms investors’ continuous support in the AFD signature, breaking a new record for the largest-ever USD orderbook obtained by AFD.
The joint lead managers for this transaction are Barclays, BNP Paribas, Crédit Agricole CIB, Citi and Morgan Stanley.
Thibaut Makarovsky, Head of Funding and Market Operations at AFD: “We are very pleased with the success and market reception of this 5-year USD bond, adding a new reference point to our curve. The strong support of investors, who appreciated the SDG label, enabled the deal to reach a record USD orderbook for AFD. AFD has now completed 47% of its 2024 €9Bn targeted funding programme, thus securing the necessary resources to fund its activity.”
Execution and distribution:
Leveraging a constructive European start of the week, the transaction was announced at 12:25 CET on Monday 26 February 2024. Concurrently to the mandate announcement, IPTs were announced at SOFR MS+55bps area. The transaction attracted solid demand from the outset, with IoIs in excess of USD 3.6bn. Books opened the following morning at 09:24 CET with guidance set 1bp tighter at SOFR MS+ 54bps area.
The orderbook witnessed a strong momentum throughout the book building process, allowing AFD to set the spread at 11:05 CET at SOFR MS+ 52bps, as books were in excess of USD 6.2bn (excl. JLM Interest).
Despite the aggressive overall 3bps tightening, the orderbook stood only minimal drops, ultimately closing at 11:30 CET north of USD 5.9bn (excl. JLM Interest) allowing the issuer to set the size at USD 2 billion representing an oversubscription rate of ~ 2.95x. This represents AFD’s largest-ever USD orderbook.
In terms of allocations, the transaction was supported by a high-quality and geographically diverse investor demand. Central Banks and Official Institutions represented the lion’s share of the demand, accounting for 60.15 % of final allocations followed by Banks with 21.78 %, and Asset Managers with 16.76%.
By geography, Europe represented the better part of allocations with 53.17%, followed by Americas with 23.10%, Asia with 15.83% and Middle East & Africa taking the final 7.90%.
Transaction summary:
- Issuer: Agence Française de Développement
- Ratings: AA (S&P, negative) / AA- (Fitch, stable)
- Size of the transaction: USD 2 billion
- Pricing Date: 27 February 2024
- Settlement date: 05 March 2024 (T+5)
- Maturity date: 05 March 2029
- Reoffer price: 99.519 %
- Coupon: 4.500 % Fixed annual, 30/360
- Reoffer yield: 4.558 % semi-annual / 4.610 % annual
- Reoffer Spread vs SOFR Mid Swaps: + 52 bps
- Reoffer Spread vs Benchmark: + 26.9 bps above T 1.875% 02/28/29
- Listing: Euronext Paris
- Governing Law: French
- ISIN: FR001400OFN2
- Joint Lead Managers: Barclays, BNP Paribas, Crédit Agricole CIB, Citi, Morgan Stanley Europe SE
- Use of Proceeds: SDG Bond Framework