AfDB Plans to release first $500 million – $1 billion hybrid capital note

The African Development Bank (AfDB) will soon release a hybrid note, making it the first multilateral institution to do so. Omar Sefiani, the bank’s interim treasurer, stated as much in a Reuters interview.

Omar claims that if the market conditions are favorable, the note, which will have a size of between $500 million and $1 billion, will be released before the end of the month.

“We’ve been ready to issue since the end of September,” stated Omar. Regretfully, the market has not been favorable, so it is crucial for us to complete this transaction successfully. It establishes the standard for the subsequent exchanges.

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Hybrid capital notes are a type of hybrid security. There are three types of hybrid capital notes which are, perpetual debt securities, subordinated debt securities, and knock-out debt securities.

One critical feature of hybrid capital notes is the equity-like feature, in that they function like shares and may not mature. They usually have lower credit ratings because the issuer may defer interest payments for years and may not repay capital for decades.