The African Development Bank is planning to issue its first hybrid capital bond before year-end if financial markets are stable, its chief financial officer told Reuters.
The bond will be a “benchmark” size, Hassatou Diop N’Sele told Reuters in an interview on the sidelines on the International Monetary Fund (IMF) and World Bank Annual Meetings in Marrakech, Morocco.
She declined to specify an amount or pricing, but said the AfDB note will have “100% equity content”.
Hybrid capital bonds are debt-like equity instruments that have a lower credit rating than more senior bonds.
Multilateral development banks are under pressure to maximise their balance sheets and adopt innovative forms of financing in order to lend more for development and tackling climate change.
“We are just looking for the right window in the market, to come in,” N’Sele said.
“It could be as soon as next week. We just need stability in the markets,” she said, adding: “It’s something that we would want to do this year, and I’m sure that there’s going to be a market for it.”
S&P Global, which gave the upcoming notes an AA-minus credit rating compared to the bank’s AAA rating, said it expects the issuance to be between $250 million and $1 billion “subject to market conditions”.
As multilateral development banks try to meet demands for reform, the World Bank last week laid out ambitious plans to speed up and boost lending.
Meanwhile, IMF member countries failed to agree on a U.S.-backed plan to boost IMF funding without giving more shares to China and other big emerging markets.
Original Story by www.sowetanlive.co.za