Rarity and ESG labelling lifted the African Development Bank's new euro bond on Wednesday, as the supranational enjoyed a quieter window after a flurry of euro issuance the day before. 

"It's a regular but rare name in the euro market," a lead banker said. "I think they made a wise decision utilising the social label on this one. It's probably most apt in euros... That definitely helped it."

An International Development Association deal from the day before provided a clear comparable for the AfDB, the lead said. Both issuers tightened pricing by 2bp to price at 28bp over mid-swaps.

Barclays, Citi, RBC and UBS gathered €2.2bn of interest for the AfDB's €1bn five-year social bond. It was a strong book, according to the lead, who said that half of it was composed of central bank and official institution orders. Those buyers are prized by SSAs for their typically buy-and-hold behaviour. Bank treasuries also showed solid interest, he said.

That the AfDB was able to attract solid demand from a range of investors was more impressive for the fact that the last fortnight has seen a surge in SSA supply, the lead said. A lack of central bank meetings and holidays has motivated the jump in activity.

"These two weeks were always clear, strategic windows... It's been almost a two-week run of [heavy] issuance," the lead said. "As it's gone on, people have taken a little bit longer sometimes to come into order books: they want things to be set."

The AfDB appears in euro benchmark format on a roughly annual basis, IFR data shows. The exception to that in the last five years was 2022, when it did two and took the following year off from public euro issuance. It more frequently comes with US dollar benchmarks and smaller clips in sterling and Australian dollar, among other currencies.

Brandenburg joined the AfDB in euros on Wednesday. It priced a no-grow €500m 10-year out of a €940m order book, of which €150m came from the joint lead managers. The demand did not give Barclays, DZ Bank, Goldman Sachs, NordLB and TD Securities room to tighten pricing, however. They priced it flat to the guidance of 41bp over mid-swaps.

Source: IFR