On May 10, 2021, the African Export-Import Bank (Afreximbank) completed the largest-ever trade in the international debt capital markets, a $1.3 billion dual tenor bond issuance. After achieving a final order book of $4.5 billion, Afreximbank printed a $600 million 5-year note with a spread of T+185bps and a US$700 million 10-year note with a spread of T+220bps.
The Initial Pricing Thoughts (IPTS) for the 5-year and 10-year tranches were announced at T+220bps and T+250bps, respectively. The combined books peaked at $5 billion, with a slight bias towards the 5-year tranche, with pricing set at T+185 bps to a re-offer yield of 2.634 percent and T+220bps to a re-offer yield of 3.798 percent, respectively, on the back of strong demand. The 10-year tranche was eventually priced at a 5bps New Issue Premium (NIP), while the 5-year tranche was priced at fair value.
HSBC Bank Plc served as the transaction’s sole financial advisor, while MUFG, Emirates NBD Bank PJSC, Commerzbank, and Standard Chartered Bank served as joint lead managers and book runners.
The deal is a significant achievement for Afreximbank, as it is the bank’s second entry to the 144A US market and its biggest debt capital market transaction to date. It achieves a range of main goals of the bank’s liability management strategy, including diversification of the liability book by geography, investor form, and tenor, as well as lower funding costs.
“This landmark deal confirms continuing investor deep trust in Afreximbank’s mission and credit tale, and achieving reasonable pricing for both tranches is a testament to the depth of support from investors from all main financial markets around the globe,” said Denys Denya, Afreximbank’s executive vice president responsible for treasury, after the closing.
Importantly, the bank will be able to continue to play a significant role in the growth of intra-African trade as well as trade between Africa and the rest of the world as a result of the success of this transaction.