Supranationals - non-Europe
240 EuroWeek Financing supranationals and agencies
African Development BankRating Aaa, AAA, AAA
Donald Kaberuka President
Charles Boamah Acting vice president finance
Pierre Van Peteghem Treasurer
Hassatou N’Sele Head of funding
Key offiCialS
The African Development Bank (AfDB) provides loans and grants to African governments and private companies investing in the regional member countries in Africa. The bank is part of the African Development Bank Group, which also comprises the African Development Fund and the Nigeria Trust Fund. The group was established in 1964.
oVerView
Minimum size is ¥100m, a wide range of currencies and structures. However, AFDB generally cannot do certain structures like those that do not guarantee principal redemption or are credit-linked.
PriVate PlaCemeNt PoliCy
Source: African Development Bank
$ bn
0
2
4
6
8
10
12
2005
2006
2007
2008
2009
2010
20
11
fuNDiNg requiremeNt
Source: African Development Bank
$ bn
0 1 2 3 4 5 6 7 8
2005
2006
20
07
2008
2009
2010
groSS BoND iSSuaNCe
Data for USD global bonds. Source: African Development Bank
Central bank / official
institutions 68%
Asset & fund
manager 17%
Banks 15%
iNVeStor BaSe By tyPe (2010)
Data for USD global bonds. Source: African Development Bank
Americas 39%
EMEA 13%
Asia 48%
iNVeStor BaSe By regioN (2010)
Source: African Development Bank
ZAR 33%
USD 40%
NZD 6%
AUD 17%
BRL 3%
ZMK 1%
iSSuaNCe By CurreNCy (2010)
Source: AfDB
%
Syndicated 36 MTN / private
placement 3
Loan 1
Other 60
iSSuaNCe By tyPe (2010)
Data at end 2010. Source: AfDB
%
USD 53%
JPY 13%
ZAR 13%
CAD 8%
AUD 5%
CHF 2% TRY
2% NZD 2%
Other 2%
outStaNDiNg iSSuaNCe By CurreNCy
AFRICAN DEVELOPMENTBANK GROUP
FONDS AFRICAIN DE DÉVELO
PPEMENT
AFRI
CAN D
EVELOPMENT FUND
BANQUE
AFRICAINE
DE DÉVELOPPEMENT
risk weighting (Basel ii): 0%
riSK weigHtiNg
Supranationals - non-Europe
Financing supranationals and agencies EuroWeek 241
Source: African Development Bank
$ bn
0
5
10
15
20
25
30
2005 2006 2007 2008 2009
total aSSetS
Source: African Development Bank
$ bn
29
30
31
32
33
34
35
2005 2006 2007 2008 2009
total CaPital
Data at end 2010, unaudited. Source: African Development Bank
$ bn
One year or less and callable 3.25
More than one year but less
than two years 4.13
More than two years but less
than three years 3.58
More than three years but less than four
years 3.12
More than four years but less than five years
1.56 More thanfive years
3.2
outStaNDiNg iSSuaNCe By maturity
AfDB’s shareholders are all the 53 countries in Africa (with a 60% shareholding) and 24 other countries — including the G7 countries (with a 28% shareholding) — in the Americas, Europe and Asia. Turkey and Luxembourg are in the process of becoming shareholders.
owNerSHiP StruCture
rank lead manager amount $m No of issues
% Share
1Daiwa Capital Markets
770 4 33.78
2 Deutsche Bank 348 2 15.26
3 HSBC 344 10 15.11
4 JPMorgan 250 1 10.95
5 Mizuho 236 5 10.38
6 UBS 148 2 6.47
7 TD Securities Inc 98 1 4.31
8 Credit Suisse 30 1 1.32
9Standard Chartered Bank
30 2 1.31
10 Morgan Stanley 25 1 1.11
Subtotal 2,279 24 100
total 2,279 24 100
Source: Dealogic (March 16, 2010 to March 15, 2011)
toP BooKruNNerS
Pricing date February 24, 2011
Value ZAR1.86bn
maturity date March 3, 2016
Coupon 0.5%
Bookrunners Daiwa Capital Markets
Pricing date February 17, 2011
Value $1bn
maturity date March 15, 2016
Coupon 2.5%
Spread to benchmark 26.6bp over USTs
Bookrunners Daiwa Capital Markets, Deutsche Bank, HSBC, JPMorgan
Pricing date January 14, 2011
Value A$300m
maturity date January 25, 2016
Coupon 5.75%
Spread to benchmark 63.5bp over ACGBs
Bookrunners Deutsche Bank, UBS, TD Securities
Source: Dealogic
reCeNt DealS
Standard & Poor’s
AAA, stable outlook
Strengths•Strongliquidityandcapitalposition•Prudentfinancialmanagementandpolicies•Strongsupportfrommembers,including12AAA
rated countries, contributing SDR5.3bn in callable capital.
Weaknesses•Relativelyriskyloanportfoliowithnonperforming
loans larger than those of multilateral peers•TheinabilityofthegovernmentsofmostAfrican
countries to borrow from the bank
Theoutlookisstable.S&PexpectsAfDB’sliquidityto remain very strong and its high franchise value to increase, given the attention Africa is receiving from the international donor community. Further weakening ofcapitaladequacycouldbemitigatedwiththesubscription and payment of the recently approved capital increase by AfDB’s shareholders, which would demonstrate shareholder support. S&P’s view on shareholder support could change if shareholders do not subscribe to the capital increase, or do not pay in the expected amounts.
Key reCeNt ratiNg ageNCy CommeNtary
fitch
AAA, outlook stable
“The ratings of African Development Bank (AfDB) primarily reflect the support from its member countries, its strong capitalisation and its conservative risk management policies. AfDB’s capital is held 53 African countries — representing 60.2% of voting rights — and by 24 non-regional countries, most of which are highly rated OECD countries. Fitch believes member countries would provide additional support to AfDB if necessary. Support from member countries takes the form of callable capital, amounting to 89.2% of subscribed capital, that can be called in the event of the bank being unable to honour its debt obligations. To respond to the rapid increase in financing needs of African countries generated by the global crisis, the AfDB increased its lending massively in 2009 and 2010. The bank’s capitalisation, which is among the highest of multilateral development banks (MDBs), markedly declined in the last three years, as reflected bythedropintheratioofusablecapitaltorequiredcapital to 11.8x in 2009 (2007: 17.4x). The capital increase will considerably improve the bank’s lending headroom and allow it to maintain a sustained growth in loan disbursement in the coming years without affecting capitalisation.
Key reCeNt ratiNg ageNCy CommeNtary