AIIB prices debut A$500 million Kangaroo bond
Strong demand for first issuance under the bank’s sustainable development bond framework
29 Apr 2021 | The Asset

The Asian Infrastructure Investment Bank (AIIB) has tapped the Kangaroo bond market for the first time, pricing on April 28 a five-year deal amounting to A$500 million (US$390.26 million).

Proceeds from the bond will be used for AIIB’s "Infrastructure for Tomorrow", its mission of investing in sustainable infrastructure to address climate change and connect Asia and the world.

The transaction is AIIB’s first bond issue following the release earlier this month of its Sustainable Development Bond Framework, which highlights the integration of environmental and social sustainability into its operations. The bank is focusing on projects that fall under its four thematic priorities: green infrastructure, connectivity and regional cooperation, technology-enabled infrastructure, and private capital mobilization. 

The offering attracted a final order book of over A$665 million, and the final spread was set at 22bp above the asset-swap spread, equivalent to 30.85bp over the Australian government bond due April 2026 and a re-offer yield of 1.0025%.

It saw strong take-up both in Australia (32%) and across the Asian region (55%), demonstrating the continued growth of AIIB’s footprint across capital markets with a number of investors participating in an AIIB transaction for the first time. The remaining 13% came from the EMEA (Europe, the Middle East and Africa) region.

AIIB treasurer Domenico Nardelli says: “This successful transaction highlights AIIB’s commitment to building liquid curves in all core currencies under our diversified funding programme. With a borrowing program of US$10 billion which will continue to gradually increase going forward, AIIB will continue to build its presence in the capital markets as a frequent borrower.”

Deutsche Bank, J.P. Morgan Securities Australia, Nomura International, and Westpac Banking Corporation were the joint lead managers for the deal.

The new issue benefited from triple-A ratings from Standard & Poor’s, Moody’s and Fitch, which the bank says reflect its commitment to the highest standards of governance, enhanced transparency and accountability.