Absa arranges first US dollar social bond issued by an African corporate

Absa Corporate and Investment Banking (CIB) was recently appointed by Bayport Management Ltd (Bayport) to be the joint book runner in the first-ever USD social bond to be issued by a corporate in Africa.

The US$260 million senior unsecured social bond, which is due in 2022, was heavily oversubscribed, reflecting investors’ recognition of the positive social impact of Bayport’s services on the markets in which the group operates.

The bond has since been listed on the Nasdaq Stockholm Sustainable Bond List.

The proceeds of social bonds exclusively finance or re-finance projects that deliver a wider social impact. In Bayport’s case, this includes job creation through small and medium-sized enterprises financing, as well as financial inclusion.

Absa’s participation in the Bayport social bond is aligned to the bank’s strategy to be a force for good in society, which focuses on providing finance and assisting clients to achieve sustainable economic growth in the markets it operates, says David Renwick, Head of Investment Banking at CIB.

The Bayport social bond is the first to be raised by a corporate in Africa. Its success shows the potential of attracting local and international investors through such instruments to finance investments and projects that have a direct and lasting impact in Africa.

“There is a definite trend from global investors to invest in more socially responsible projects and companies because they want to see their funds are being invested in responsible activities. Green bonds were the first type of socially responsible investing instruments and have been around for at least a decade. In Africa, green bonds have been issued in countries such as South Africa, Kenya and Nigeria,” says Renwick.

“But social bonds are newer, and while there have been a few such bonds issued in the past, the International Capital Market Association (ICMA) published its Social Bond Guidelines in 2018 to provide a disclosure framework meant to promote integrity in the development of the market by clarifying the approach for issuing a social bond,” he says.

Renwick says Bayport chose Absa because of the long-term relationship the company has with the bank.

“Because they wanted to issue in the international market, it was critical for them to partner with a bank that understands their business and risk profile. It, therefore, became a natural choice to appoint Absa as the only African bank on this transaction,” says Renwick.

“Absa is ready to assist other corporates interested in issuing social bonds because we have both the expertise and access to institutional investors and other global financial institutions with an appetite for these instruments,” he added.

Bayport Capital Markets Executive David Rajak says the successful USD corporate social bond issue affirms that social relevance underpins Bayport’s business and that the market recognises it.

“This, together with the group’s sustained robust financial performance, has helped drive a significantly broader base of investors compared to Bayport’s six previous bonds issues in the international capital markets. One of Bayport’s core values is to enable economic and self-empowerment by giving access to life-changing financial solutions, which is what we will do with the capital raised through the social bond”.

Rajak adds that the social rating is an affirmation of Bayport’s customer-centric business model.

“While our funding partners have long been aware of this, it is great to have it independently acknowledged as well. The social rating cements our commitment to be a socially responsible and relevant credit provider, and to lead market innovation in our industry.”

Bayport’s Botswana operation was the first credit provider in Africa and the first payroll lender in the world to achieve Client Protection Certification by The Smart Campaign.

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning:

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
Yves Saint Laurent starts selling designer condoms for R95 a pop

Yves Saint Laurent starts selling designer condoms for R95 a pop

Some things in life just don’t need a “designer” counterpart, reckons branding and advertising expert Andy Rice.

We bought 2 corrupt businesses back in 2012 - Stephen van Coller (CEO at EOH)

We bought 2 corrupt businesses back in 2012 - Stephen van Coller (CEO at EOH)

If EOH didn’t make those mistakes, the company would have no debt today, laments its CEO, Stephen van Coller.

5 retirement saving tips for those who left it late

5 retirement saving tips for those who left it late

It’s better to start late than never! The Money Show’s Bruce Whitfield interviews Jeanette Marais.

South Africans are drowning in debt but still clamouring for credit

South Africans are drowning in debt but still clamouring for credit

Loans sharks are having a field day and there's an organised crime element, says personal finance journalist Maya Fischer-French.

How to get a nice, fat tax refund from Sars (a guide for business owners)

How to get a nice, fat tax refund from Sars (a guide for business owners)

The Money Show's Bruce Whitfield interviews Daniel Baines, author of "How to Get a Sars Refund for Small Businesses".

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

You only live once — personal finance guru Warren Ingram on divvying up your income if you're not the budgeting type.

Popular articles
[WATCH] Man forgets to engage handbrake, truck almost hits other cars

[WATCH] Man forgets to engage handbrake, truck almost hits other cars

Khabazela shares tweets and Facebook posts that have gone viral.

We have bent over backwards, it appears unions don't want to settle - SAA

We have bent over backwards, it appears unions don't want to settle - SAA

Sacca president, Zazi Nsibanyoni-Anyiam Mugambi and airlines acting CFO Deon Fredricks weigh in on the strike facing the airline.

Can’t find your phone? Drop everything – thieves can get into your banking app!

Can’t find your phone? Drop everything – thieves can get into your banking app!

Did someone steal your phone? Contact your bank without hesitation warns consumer journalist Wendy Knowler.

'Unions are making a mistake. SAA is dying. It’s not Eskom – we don’t need it'

'Unions are making a mistake. SAA is dying. It’s not Eskom – we don’t need it'

SAA is on its knees, cap in hand, asking taxpayers for R2 billion this month. Unions must be careful, warns Guy Leitch (SA Flyer).

Unions and SAA get ready for fight that threatens to break the ailing airline

Unions and SAA get ready for fight that threatens to break the ailing airline

Joanne Joseph plays audio from the media briefing over the impending strike.

White pupils at posh Kingswood College refer to black scholars as 'snoobab'

White pupils at posh Kingswood College refer to black scholars as 'snoobab'

"This problem is bigger than just a Kingswood problem. The relevant processes will unfold," says College Head Colleen Vassiliou.

We’ll shut you down! – unions to SAA ('overstaffed by any measure globally’)

We’ll shut you down! – unions to SAA ('overstaffed by any measure globally’)

The money-pit airline is fighting for its life. Bruce Whitfield interviews Theto Mahlakoana, a senior political reporter at EWN.