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Africa Finance Corporation oversubscribes second CHF bond

Africa Finance Corporation (AFC), an investment multilateral finance institution has issued a CHF bond that matures in 2023 and which has already oversubscribed.

AFC invests in high-quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications.

To date, the Corporation has invested over US$6.6B in projects within 30 countries across Africa.

This latest Africa Finance Corporation CHF bond issue has attracted great investment across Europe with AFC saying ‘it received strong investor interest from private banks and asset managers, and the bond has experienced an oversubscription.’

“The response to our second Swiss Franc bond issue has been overwhelmingly positive with order-books three-times oversubscribed,” said Samaila Zubairu, President& CEO of AFC.

The CEO also pointed out that ‘the strong appetite for AFC bonds is further testimony of investor confidence in AFC’s credit story, holistic investor engagement strategy and support for our mandate to develop and fund infrastructure projects that will unlock the continent’s potential.

“Furthermore, the unprecedented coupon exemplifies the current reality of negative yields in Europe. Investors must look beyond to find safe yet attractive investment opportunities,” he said

Also read: Angola Central Bank buys over £130M in treasury bonds

The bond was priced with a tenor of four years and had an annual coupon of 0.5225%. Notably, this is actually the lowest coupon placed in the CHF market by an African issuer. The transaction was priced inside the Corporation’s existing USD Eurobond.

To attract investors, the bond issue was first promoted by an extensive roadshow conducted across Europe. Switzerland bought most of the bond which will be listed on the Swiss Stock Exchange.

Oversubscription means that the bond attracted more buyers than was initially anticipated. This will now empower AFC to further diversify its debt portfolio and secure financing to cover infrastructure projects across the continent.

Rated A3 by Moody’s Investor Services, this issuance marked AFC’s second CHF bond of which the financer’s Senior Director & Treasurer of AFC, Banji Fehintola, expressed their enthusiasm over the investor response.

“We are very pleased with the results of our second Swiss bond issue. It is a landmark for AFC and Africa in general,” added the Senior Director.

This is a great funding option for AFC and as the Director pointed out, “…this new bond will provide us with liquidity to refinance our maturing CHF bond and fund the Corporation’s balance sheet growth. We look forward to deepening our relationship with Swiss investors and frequenting more often this very important market.”

AFC a finance institution, with over 10 years experience (established in 2007) commands an equity capital base of US$1B. AFC rightfully boasts as the lead financer of private sector-led infrastructure investment across Africa.

With a current balance sheet of approximately US$5.07B, AFC is the second highest investment grade rated multilateral financial institution in Africa. Further, the investor has under its belt, an A3/P2 which is one of the highest rating from Moody’s Investors Service. Under the auspices of its US$3B Global Medium-Term Note (MTN) Programme, last year alone, AFC successfully raised US$1,15B from two bonds raising US$650M and US$500M respectively.

Before that, in 2017 AFC raised US$500M another US$750M in 2015 all done through Eurobond issuances.

Of these, all the issued Eurobonds were oversubscribed and attracted investors from Asia, Europe and the USA.

AFC’s investment approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth.

Original article on The Exchange

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