AfDB Issues its Inaugural Local Currency Bond in the Nigerian Capital Market

21 Jul 2014

The African Development Bank (AfDB) launched a 7 year, semi-annual fixed rate coupon bearing bond structured with a 3 year grace period preceding a 4 year amortising profile on principal, introducing a new instrument into the domestic market and adding another issuance into the supranational asset class. The Bank successfully raised NGN 12.95 billion, issuing at a discount of about 75 bps below the comparable reference point on the government yield curve (Federal Government of Nigeria January 27, 2022) to price at 11.25%. This issuance marks the AfDB's third domestic bond issue in Africa, outside of South Africa.

Pierre Van Peteghem, Treasurer of the African Development Bank Group said that "Issuances in the local markets allow the Bank to lend to its borrowers in local currencies thereby eliminating their currency risks, and to participate in the development of African capital markets by providing a new investment product to the local institutional investors." He added that "The Nigerian Naira issuance confirms the AfDB's commitment to launch more local currency bonds across the continent, with proceeds used to provide local currency loans to the Bank's clients. This will enable us to better respond to client needs, particularly with respect to mitigating the foreign exchange risks posed by hard currency loans."

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