The African Export-Import Bank (Afreximbank) (www.Afreximbank.com) has been recognised with a much-coveted “Sustainable Deal of the Year” award for its pioneering work in the establishment and development of the Liquidity and Sustainability Facility (LSF), a vehicle that seeks to increase liquidity and demand for Eurobonds issued by African Sovereigns.
Issued by Uxolo Global 2023: Development and Impact Finance and co-hosted by TXF, the award highlights the positive impact which increased demand for these Eurobonds can have in promoting investments in sustainable infrastructure and development across Africa.
The LSF seeks to harness and infuse enhanced liquidity into Africa’s financial markets by contributing to the development of a larger repurchase agreement (“repo") market on the continent from the current low level, relative to developed markets. Deep and mature repo markets in developed economies help lower the cost of borrowing and increase debt sustainability for Sovereign bond issuers.
In November 2022, Afreximbank, as a funding and strategic partner, advanced a US$200-million revolving loan facility to the LSF, acting as a funding counterparty in the framework of African Sovereign Eurobonds repo transactions. The facility was renewed in 2023 for new transactions.
With the US$200-million seed funding and employment of best-in-class service providers, the LSF is targeting to raise up to US$5 billion of financing in the medium term.
Welcoming the award, Prof. Benedict Oramah, President and Chairman of Afreximbank, said that the Bank’s support to the LSF is a reflection of its continuing commitment to positively impact Africa’s financial markets.
“Afreximbank will continue to work on initiatives such as the LSF to enhance the level of markets liquidity on the continent,” said Prof. Oramah. “This is essential in order to achieve cost and interest savings and increase debt sustainability for African governments.”
Having closed its inaugural transaction at COP27, the LSF is now actively working with owners of African Sovereign Eurobonds and funding counterparties to bring liquidity to a universe of more than 120 eligible bonds.
Afreximbank announced that activities of the LSF were expected to result in significant interest savings by African sovereigns, which was estimated to be in the region of US$11 billion over five years with full implementation and scaling of the LSF.
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About Afreximbank:
African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. For 30 years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the Bank is setting up a US$10 billion Adjustment Fund to support countries to effectively participate in the AfCFTA. At the end of 2022, Afreximbank’s total assets and guarantees stood at over US$31 billion, and its shareholder funds amounted to US$5.2 billion. The Bank disbursed more than US$86 billion between 2016 and 2022. Afreximbank has investment grade ratings assigned by GCR (international scale) (A), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure, (together, “the Group”). For more information, visit: www.Afreximbank.com
About the Liquidity and Sustainability Facility:
The LSF was designed with the support of the United Nations Economic Commission for Africa and Afreximbank, with the dual objective of supporting the liquidity of African Sovereigns Eurobonds and incentivizing SDG-related investments such as such as GSS bonds on the African continent. The establishment of the LSF was announced in November 2021 at the COP26 in Glasgow. Its aim is to improve African Sovereign debt sustainability and, through its participation with African governments and private investors, contribute to the enhancement liquidity in the market on par with international standards. An improvement in the terms of new issuances of SDG- or climate-linked bonds for African nations could see a dramatic increase in the volume of green and blue bond financing, and at affordable and sustainable rates. The LSF is amongst USAID 2023 EDGE Fund Projects. For more information, visit www.LSFacility.org
