African Development Bank (AfDB) Breaks Ground with 0 Million Hybrid Capital Note Issuance

Summed-Up News: The African Development Bank (AfDB) has made history by issuing a $750 million perpetual hybrid capital note, a novel financial strategy recommended by the G20 for multilateral development banks. This instrument, with a 5.75% coupon, offers flexibility to investors and can be redeemed after 10.5 years. The bank’s Vice President of Finance, Hassatou N’Sele, hints at a strategic shift, emphasizing the establishment of hybrid capital as a new asset class. The issuance, coordinated by BNP Paribas and Goldman Sachs, faced initial delays but garnered diverse investor participation, showcasing the appeal of this pioneering financial instrument. The AfDB plans a cautious and progressive approach, with one or two transactions per year, aligning with its commitment to responsible financial management.

The AfDB’s move into hybrid capital notes is a significant milestone, reflecting a proactive response to the G20’s call for innovative financing structures. The higher-than-expected investor interest and participation highlight the instrument’s broad appeal, emphasizing its potential as a new asset class for multilateral development banks. The bank’s strategic and measured approach, with safeguards in uncertain times, underscores a commitment to responsible financial management. This pioneering step positions the AfDB at the forefront of addressing challenges faced by developing economies, particularly in the realm of climate change.