Case study

AFD’s third Sustainable Bond for 2022 has global appeal

25 Oct 2022 . 3 min read

Supporting sustainable projects across the world

The Agence Française de Développement (AFD), supports, and accelerates the transition to a fairer and more sustainable world. Focusing on climate, biodiversity, peace, education, urban development, health, and governance, AFD teams carry out more than 4,000 projects in 115 countries as well as in France’s overseas departments and territories.

Being a recurrent issuer of Climate Bonds since 2014, the AFD published its new SDG Bond Framework in October 2020, with the UN Sustainable Development Goals (SDGs) at its core: loans given out will be selected by their contribution to the SDGs. Vigeo Eiris provided a Second Party Opinion (SPO) for the framework, confirming that it is aligned with ICMA’s Green Bond Principles (GBP), Social Bond Principles (SBP) and Sustainability Bond Guidelines (SBG).

Investor support highlights AFD’s strong reputation within and outside of Europe

Looking to tap into the capital markets for a third time this year with a Sustainable Bond, AFD approached NatWest to support the transaction in the role of Joint Bookrunner.

Amidst ongoing volatility, AFD seized a constructive window in the market and announced a new 10-year EUR Sustainable Bond, with high quality investors showing strong support for the book. After price guidance, the order volume grew to over €1.3 billion, which allowed AFD to set the size at €1.2 billion for the bond, which has an annual coupon of 3.500%.

The proceeds will be used to finance or refinance eligible sustainable expenditures as set out in AFD’s SDG Bond Framework, which include amongst others: loans for energy transition projects, loans for territorial and ecological transition projects, and loans for demographic and social transition projects.

In terms of investor demand, this transaction underscored the strength of AFD’s presence both within and outside of Europe with 40.1% of the bond allocated for investors in France, 14.2% for Benelux investors, 12.4% for investors in Germany, Switzerland and Austria, while 8.4% went to North America and 4.2% to Asia.

Asset Managers took 56.4%, followed by Central Banks and Official Institutions with 25.8% for Central Banks, and 8.7% going to banks and private banks.

Putting sustainability at the heart of our future

Thibaut Makarovsky, Head of Funding and Market Operations at AFD, commented: “We are very proud to again see such a strong investor reaction to our Sustainable bond issuance. In a busy pipeline for French Agency issuance, we would like to express our thanks to the AFD investor base in further supporting our ongoing funding under the SDG Bond Framework.”

Damien Carde, Head of Frequent Borrower Group DCM, NatWest, said: “We are delighted to have been able to support the AFD with this successful Sustainable Bond issuance. Our involvement in this transaction is another example of bringing NatWest’s purpose-led strategy to life - putting sustainability at the heart of our future.”

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