BAD: 1.25 billion euros raised to fund social projects in Africa

The African Development Bank (AfDB) raised €1.25 billion in international capital markets on June 3, 2026, through the issuance of a seven-year social bond with a fixed coupon of 3%, redeemable on June 10, 2033, according to the official announcement from the institution published on June 4.

This is the AfDB’s first euro issuance for the 2026 fiscal year and its first seven-year bond in this currency since 2022. Settlement occurred on June 10, 2026. The yield at issuance was set at 3.701%, for a reoffer price of 99.559 cents, with a spread of 14 basis points above the swap rate (mid-swaps), which is 23.6 basis points above the benchmark German Bund (DBR 2.3% February 2033). This level represents, according to the institution, the tightest spread ever recorded by the AfDB relative to the German Bund. The ISIN of the bond is XS3402832441. The four bookrunners are Crédit Agricole, Goldman Sachs, JP Morgan, and NatWest.

Investor demand outstripped supply, with a final order book exceeding €2.1 billion, including €300 million in interest from the bookrunners. The mandate was announced on Tuesday, June 2 at 11:20 London time; the books officially opened the next day at 7:50 with an initial guidance of mid-swaps plus 16 basis points, tightened by 2 basis points to 14 basis points at 10:10 in response to demand pressure.

An Investor Base Dominated by Official Institutions

The geographical distribution of the placement is dominated by Europe, which absorbs 81% of the allocation, followed by the Middle East and Africa (8%), Asia (8%), and the Americas (3%). By type of investor, central banks and official institutions account for 48% of the placement, ahead of banks (28%) and asset managers (24%).

The AfDB has a triple A rating from the three major rating agencies – Aaa from Moody’s, AAA from Standard & Poor’s, and AAA from Fitch (all with stable outlooks). The bond is issued under the Bank’s Sustainable Bond Framework established in September 2023, which sets the eligibility criteria for projects that can be financed by this type of instrument. The funds raised will be allocated to financing eligible social projects in the Bank’s regional member countries, particularly covering the sectors of infrastructure, health, education, and social inclusion.

This issuance brings the total fundraising by the AfDB since the beginning of 2026 to $10.1 billion (approximately €9.3 billion), or 83% of its annual borrowing program. It follows a $2 billion five-year issuance conducted in March 2026 and an inaugural issuance in Hong Kong dollars (HKD) amounting to HKD 3 billion in March as part of the launch of a so-called “Wonton Bond”.

A Recurrent Instrument in the AfDB’s Financing Strategy

The AfDB has regularly used euro social bonds to diversify its investor base and finance its development on the continent. In May 2025, it issued a five-year social bond in euros worth €1 billion, its first issuance in this currency since September 2022. In 2022, two euro issuances were completed: a €1 billion five-year bond in March, and a €1.25 billion seven-year bond in September.

Founded in 1964 and headquartered in Abidjan, the AfDB has 81 member countries – 54 African countries and 27 non-African countries. Its authorized capital amounts to $208 billion. The Bank also has a concessional window, the African Development Fund (ADF), which finances the least developed countries on the continent under preferential conditions. For 2025, the AfDB Group’s approvals reached $15.3 billion, according to its annual report published at the end of May 2026.