On Thursday 12 March, the African Development Bank (“AfDB”), rated Aaa/AAA/AAA/AAA (Moody’s/S&P/Fitch/JCR) successfully priced an inaugural public HKD 3 billion 3.25-year benchmark transaction (“Wonton Bond”).

Despite recent geopolitical developments, including the war in Iran, and the resulting interest rate volatility, the Bank has capitalised on a favourable issuance window and priced the deal at the upper end of size expectations (HKD 3 billion) at HIBOR Midswaps +0 basis point (bp), 3bps inside initial price guidance. The final order book comprised high-quality accounts, including new investors in this market, and closed in excess of HKD 4.6 billion (including HKD 3.05 billion in Joint-Lead Managers (JLM) interest). In terms of demand, the bulk was placed into Hong Kong (98%) with bank treasuries taking the majority (84%), followed by Fund Managers/Insurance (12%), Corporates (3%), and Official Institutions (1%).

The mandate was announced at 09:42 HKT, with initial price guidance at HIBOR Midswaps +3bps area. Demand was strong from the outset, and the first book update at 11:14 HKT showed an order book exceeding HKD 4.4 billion (including HKD 3.05 billion of JLM interest). The orderbook grew further to be above HKD 4.7 billion (including HKD 3.05 billion of JLM interest), with the high-quality investor base supporting a 3bps spread compression to land at HIBOR Midswaps +0bps at 15:06 HKT. The deal was launched at 16:22 HKT, with the final issue size set at the upper end of expectations at HKD 3 billion (equivalent to around USD 380 million).

The transaction priced at 16:29 HKT at par, with a re-offer yield and coupon of 2.615%. With this inaugural Wonton Bond, the Bank has further diversified its investor base, demonstrating the strong recognition of its credit while gaining visibility through this public benchmark transaction in a new market and among a broader range of potential Chinese investors, and successfully achieving its objectives despite severe geopolitical uncertainty.

Source: AfDB