By Emmanuel Oluebube, Correspondent UK
In a sign of robust global investor interest in the continent, a multilateral development financial institution Africa Finance Corporation(AFC) dedicated to infrastructure financing in Africa, successfully issued a Eurobond at its lowest yield to date.
The US$750 million 2.875 per cent 144a/ Reg S Notes due 2028 were priced at 175 bps over US Treasuries to yield 2.991 per cent. The Corporation has progressively reduced its funding cost on dollar benchmark issuances with a shorter dated 5-year US$700 million Eurobond in 2020 at 3.250 per cent, a 10-year US$500 million Eurobond in November 2019 at 3.895 per cent and a 7-year US$650 million Eurobond in June 2019 at 4.500 per cent.
AFC is focused on bridging Africa’s large infrastructure deficit by financing projects that have high developmental impact on the economies of African countries. The final order book was 3.5 times oversubscribed at approximately US$2.6 billion, with funds coming from more than 200 investors, across the UK (32%), Continental Europe (23%), Middle East (22%), Asia (13%), and the US/Americas (10%).
“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,” said President & CEO of Africa Finance Corporation, Samaila Zubairu,. “AFC will continue to mobilize capital for investments to accelerate sustainable development impact with greater focus on reducing Africa’s energy deficit and job creation challenges through climate resilient infrastructure, energy transition and other projects driving Africa’s economic recovery post-COVID.”
AFC’s approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and deployment of risk capital to address Africa’s infrastructure and industrial development needs.
This is the sixth Eurobond under AFC’s US$5 billion Global Medium-Term Note programme, which is rated A3 by Moody’s Investors Service. The Corporation will use proceeds from the bond to continue investing in critical infrastructure that delivers on its long-term vision to drive social, economic and sustainable change across Africa.
Senior Director & Treasurer of AFC, Banji Fehintola said: “This successful issuance follows a year of severe market disruption exacerbated by the COVID-19 pandemic. The appetite and pricing are an endorsement of the Corporation’s long-term prospects and reflects our strong credit profile and established market presence. We are also delighted with the strong demand from a diverse pool of accounts, which has further diversified our funding sources.”
The bond issuance was arranged by BofA Securities, First Abu Dhabi Bank, Goldman Sachs International, J.P. Morgan and MUFG as Joint Bookrunners with White & Case, Clifford Chance and Aluko & Oyebode as legal advisers.