A$600m 4.300% Kangaroo Social Inclusion Bond due April 2029

Paris - On Friday 22nd March 2024, Council of Europe Development Bank (CEB), rated Aaa/AAA/AAA (all stable), priced a new A$600m 5-year Kangaroo Social Inclusion Bond (SIB) benchmark due 3rd April 2029.

Highlights

• CEB took advantage of a strong backdrop in the SSA Kangaroo primary markets that has been persistent in 2024, and tactically waiting for local labour force data, which saw a rise in interest rates making an attractive entry point for investors
• This deal is CEB’s first AUD Kangaroo syndicated benchmark transaction since February 2022, a highly successful and strategic “re-entry” trade and their largest Kangaroo benchmark to date. It also marks CEB’s first ever SIB in benchmark Kangaroo format
• Notably, this is the first Kangaroo trade since CEB restored its triple-A rating across all three major credit rating agencies, and the tightest ever spread to peers in the market
• The deal was met with very high-quality and global demand, with books closing in excess of A$640m, the largest orderbook to date for CEB in AUD
• Allocations were diverse across regions and investor types, with demand from all corners, including LatAm, EMEA, Asia and naturally Australia. On the ESG specific front, over 80% of the transaction was allocated to ESG specific accounts, further highlighting the importance of the choice of CEB to proceed in SIB format
• With this trade, CEB anchored its Kangaroo curve with a liquid reference point in a key maturity bucket, setting solid grounds for future entries in the AUD market
• The Joint Lead Managers on the transaction were Nomura, RBC Capital Markets, and Deutsche Bank

Deal details

The New SIB was announced to the market on Thursday March 21at 07:53h UKT/18:53h SYD with indicative pricing of ASW +45bps area.

The trade was immediately met with demand from high-quality accounts, with books standing in excess of A$500m (Excl. JLMs) at the first book update at 22:10h UKT/09:10h (+1) SYD.

Price guidance remained unchanged at ASW+45bps area, while book closing times were set for 13:00h SYD/10:00h HKSG/11:00h TKY.

A few hours later at 01:50h UKT/12:50h SYD the second book update was shared with demand in excess of A$600m (excl. JLMs) with minimum deal size communicated at A$500m and spread set at ASW+45bps.

Books closed 10 minutes later at 13:00h SYD, with final demand in excess of A$640m (Excl. JLMs), with a final deal size set at A$600m.

Finally, at 03:20 UKT/14:20 SYD, the New A$600m SIB Kangaroo deal was priced. The deal pays a coupon of 4.300%, with a reoffer price and yield of 99.804% and 4.344% respectively.

Allocations-wise, EMEA-based investors took the lion’s share with 79% of allocated demand, followed by Asia (15%), Americas (4%) and Australia (2%). Investor quality on this deal was of very high, with CB/OIs taking 74% of the transaction, followed by Banks (21%) and Fund Managers, Insurers and Pension Funds (5% combined).

Socially Responsible Investors (SRI) provided very strong support to this transaction with over 80% of the issue allocated to such investors.

Investor distribution

By geography

EMEA: 79%
Asia: 15%
Americas: 4%
Australia: 2%

By investor type

CB/OI: 74%
Banks: 21%
FM/Ins/Pens: 5%

For full technical details of the transaction, please click here.