The African Development Bank (AfDB) has raised a record $673 million on the Australian bond market, underscoring strong investor appetite for high-grade emerging market debt despite tightening global financial conditions.
The Abidjan-based lender said on Tuesday that it issued a five-year social bond worth 1 billion Australian dollars, its largest-ever benchmark borrowing in the Australian dollar market, after demand significantly exceeded initial expectations.
The Kangaroo bond, which matures in January 2031, carries a coupon of 4.6% and was priced at a margin of about 40 basis points over the Australian swap rate. The transaction attracted orders of more than A$2.6 billion, equivalent to roughly $1.7 billion, allowing the bank to scale up the size of the deal from its original target.
“The Bank prepared well ahead to be able to react swiftly to the constructive market tone and clear issuance window to launch the first new AUD benchmark since February 2025, an AUD 5-Year Benchmark Social Bond,” the AfDB said in a statement.
The deal was coordinated by Nomura, RBC Capital Markets and TD Securities, and marks the fourth time the AfDB has issued a social bond in the Australian market.
Strong institutional demand
The composition of investors highlights the depth of institutional demand for the bank’s debt. According to the AfDB, banks and private banks took the largest share of the issuance, accounting for 40% of final allocations. Asset managers and insurance companies followed with 32%, while hedge funds and trading investors made up 22%. Central banks and other official institutions accounted for the remaining 6%.
Geographically, Australian investors dominated the book, taking 49% of the bonds. Investors from Asia, excluding Australia, accounted for 44%, while the Europe, Middle East and Africa region represented 6%. The United States made up just 1% of demand.
“The broad and global distribution of this transaction is once again testament to AfDB’s unwavering support within the global investor community,” the bank said.
The strong take-up reflects AfDB’s AAA credit rating from Moody’s, S&P and Fitch, placing it among a small group of multilateral lenders able to raise large volumes of funding at relatively low cost, even as borrowing conditions tighten for most emerging and frontier economies.
Funding social projects
The proceeds from the bond will be used to finance eligible social projects across Africa under the bank’s social bond framework. These include programmes focused on poverty reduction, job creation and improved access to essential services such as healthcare, education and basic infrastructure.
Social bonds have become an increasingly important funding tool for multilateral development banks, as global investors seek assets that combine strong credit quality with measurable development impact.
For the AfDB, the Australian market has become a strategic funding source, offering access to long-term capital from a diversified investor base, while reducing reliance on traditional dollar and euro markets.
Pressure on concessional funding
The successful capital raise comes at a critical time for the bank, as it faces a widening funding gap on its concessional lending arm.
In December, the African Development Fund (ADF), which provides low-interest loans and grants to the poorest African countries, secured $11 billion in pledges from donors — a record in absolute terms but well below the AfDB’s $25 billion target.
The shortfall, estimated at about $12 billion, follows rising uncertainty around contributions from the US, historically one of the fund’s largest donors.
Despite the gap, AfDB President Sidi Ould Tah said the outcome still represented a major milestone for the institution and signalled continued confidence from both donors and private investors.
NB: 1AUD = $0.6 as of January 21, 2026
