AfDB Launches First ESG African Frontier-Currency Bond

ADDIS ABABA – The African Development Bank (AfDB) launched a 19-billion Ugandan shilling (UGX) ($5.07 million) 2-year theme bond, the first-ever African frontier currency-denominated environmental, social, and governance (ESG) issuance by a multilateral development institution.

The bond, due June 2024, will be settled in dollars at a fixed coupon of 10.5%.

The Bank said the bond launched on July 14 was issued under the African Development Bank Group’s ‘Feed Africa’ strategic High 5 on July and marks the Bank’s first offshore UGX bond issuance in 2022. 

Standard Chartered Bank arranged the transaction under the Bank’s Global Debt Issuance Facility. Capitulum Asset Management was the investor.

The Bank will direct funds equal to the net proceeds of the issue to lending projects that advance the ‘Feed Africa’ strategic priority, in accordance with its lending standards.

AfDB “is very pleased” to launch the “inaugural African frontier currency ESG transaction, contributing to our High-5 development priorities while extending our investor reach in Europe,” said Keith Werner, AfDB Division Manager for Capital Markets and Financial Operations.: 

Under its Feed Africa strategy, the Bank said it is working to contribute to reducing poverty, ending hunger and malnutrition, making Africa a net food exporter, and moving Africa to the top of export-orientated value chains where it has a comparative advantage. 

Theodor Kirschner, Fund Manager at Capitulum Asset Management said: “Our participation in the African Development Bank’s Ugandan shilling bond funding the ‘Feed Africa’ program helps us to reach our goal to invest with a positive impact while providing an adequate yield in a frontier currency.”

Feed Africa envisions to make Africa a net food exporter by 2025.

Featured image caption: Automated trading session at Uganda Securities Exchange [Photo AfDB]

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