Lagos-based pan-African multilateral development finance institution African Finance Corporation (AFC) successfully issued a Eurobond at its lowest yield to date.
This is an indication of the strong interest of global investors in the African continent and the development finance institution which is dedicated to infrastructure finance and investment in key sectors of the continent.
This disclosure is contained in a press release issued by AFC a few days ago.
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According to the AFC statement, the $ 750 million US 2.875% 144a / Reg S Notes, which are due in 2028, were valued at 175 basis points against US Treasuries for a yield of 2.991%, adding that the Company has gradually reduced its cost of financing against the reference dollar issues with a 5-year Eurobond of USD 700 million with a shorter maturity in 2020 at 3.250%, a 10-year Eurobond of USD 500 million in November 2019 at 3.895% and a 7-year Eurobond of $ 650 million in June 2019 at 4.500%.
AFC focuses on reducing Africa’s large infrastructure deficit by financing projects that have a strong impact on the development of the economies of African countries. The final order book was 3.5 times oversubscribed to around US $ 2.6 billion, with funds coming from over 200 investors, across the UK (32%), mainland Europe (23% ), the Middle East (22%), Asia (13%) and the United States / Americas (10%).
What the AFC President and CEO says
AFC President / CEO Samaila Zubairu said: “This reflects investor confidence in AFC’s mandate and investment strategy, which is particularly critical at a time when the COVID-19 pandemic has challenged Africa’s development.
“AFC will continue to mobilize capital for investments to accelerate the impact on sustainable development with a greater focus on reducing Africa’s energy deficit and the challenges of creating jobs through infrastructure resilient to climate, energy transition and other projects supporting Africa’s economic recovery after COVID. ”
This is the sixth Eurobond under AFC’s $ 5 billion Global Medium-Term Note program, rated A3 by Moody’s Investors Service.
AFC should use the proceeds of the bond to continue investing in critical infrastructure that translates into its long-term vision of driving social, economic and sustainable change across Africa.
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AFC Senior Director and Treasurer Banji Fehintola said:
“This successful show follows a year of severe market disruption exacerbated by the COVID-19 pandemic. Appetites and pricing are a testament to the company’s long-term outlook and reflect our strong credit profile and established market presence. We are also delighted with the strong demand for a diversified pool of accounts, which has further diversified our sources of funding. “
The bond issue was arranged by BofA Securities, First Abu Dhabi Bank, Goldman Sachs International, JP Morgan and MUFG as associate bookkeepers with White & Case, Clifford Chance and Aluko & Oyebode as legal advisers.
What you should know
AFC, which was established in 2007 by sovereign African states to provide pragmatic solutions to Africa’s infrastructure deficit and challenging operating environment, bridges the infrastructure investment gap by providing financing through debt and equity, project development, technical and financial advisory services.
The company focuses its investments on 5 key sectors, including energy, transport and logistics, natural resources, telecommunications and heavy industries.
AFC is majority owned by African private investors (55.3% of the company’s capital) with 44.7% held by the Central Bank of Nigeria.
As of April 2020, AFC has 26 Member States, including Nigeria (host country), Benin, Cape Verde, Chad, Côte d’Ivoire, Djibouti, Eritrea, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia and Madagascar. , Malawi, Mauritius, Rwanda, Sierra Leone, Togo, Uganda, Zambia and Zimbabwe.
To date, the African Finance Corporation has invested over US $ 6.6 billion in infrastructure projects in 28 African countries.