Published: July 25, 2016
The year so far has been slow for Eurobond issuance in Africa, but BOAD’s debut transaction suggests investors are overcoming their risk aversion.
Banque Ouest Africaine de Développement’s (BOAD’s) debut Eurobond was issued on 6 May. Valued at US$750 million, the five-year bond is one of the largest of its kind ever to be issued by an African bank. Its carries a re-offer yield of 5.75%, and was rated Baa1 and BBB by Moody’s and Fitch respectively.
A supranational development finance organisation, set up by the governments of the West African Francophone region, BOAD is headquartered in Togo and operates across eight countries. This is the first time it has raised funding on the international capital markets.
“BOAD wanted to access international investors for various reasons, including the fact that their development projects required funding,” Megan McDonald, global head of debt primary markets at Standard Bank, tells EMEA Finance. “The economies in which they operate are some of the fastest growing economies in Africa, so their need for funding was in keeping with this growth.”
As well as meeting its own project financing needs, BOAD also wanted to access a new investor base and bring its story to the international capital markets. The bank had been very successful at raising local currency bonds, making this a natural next step.
Originally, BOAD had hoped to transact in January, but given the unfavourable market conditions, Standard Bank had encouraged them to wait. The bank acted as the Joint Lead Manager and Bookrunner on the issuance.
“It wasn’t so much a concern around BOAD’s story in particular – which investors found very powerful and interesting – it was more the global macroeconomic backdrop,” says McDonald. “We were able to come back in with much better conditions and do a very successful debut transaction for them in April.”