Sustainable Deal of the Year awarded to Afreximbank’s Liquidity and Sustainability Facility for Africa
A highly sought-after “Sustainable Deal of the Year” award has been given to the African Export-Import Bank (Afreximbank) (www.Afreximbank.com) in recognition of its innovative work in the creation and growth of the Liquidity and Sustainability Facility (LSF), a platform designed to boost demand and liquidity for Eurobonds issued by African Sovereigns.
The award, co-hosted by TXF and presented by Uxolo Global 2023: Development and Impact Finance, emphasizes the advantages of raising demand for these Eurobonds in order to encourage investments in sustainable infrastructure and development throughout Africa.
By helping the continent’s repurchase agreement (“repo”) market grow from its current low level in comparison to established countries, the LSF hopes to improve liquidity in Africa’s financial markets. For issuers of sovereign bonds, extensive and well-developed repositories of bonds can reduce borrowing costs and improve debt sustainability.
In November 2022, Afreximbank provided the LSF with a $200 million revolving credit facility, serving as a funding counterparty for African Sovereign Eurobonds repo transactions. Afreximbank was the financial and strategic partner for the LSF. In 2023, the facility was extended to accommodate new transactions.
The LSF aims to raise up to US$5 billion in financing in the medium term with the help of best-in-class service providers and US$200 million in startup money.
Prof. Benedict Oramah, President and Chairman of Afreximbank, accepted the award and stated that the Bank’s support for the LSF is evidence of its ongoing dedication to having a beneficial impact on the financial markets in Africa.
Prof. Oramah declared, “Afreximbank will keep working on initiatives like the LSF to enhance the level of market liquidity on the continent.” “This is crucial to increase debt sustainability for African governments and achieve cost and interest savings.”
The LSF is currently actively collaborating with funding counterparties and owners of African Sovereign Eurobonds to provide liquidity to a pool of more than 120 qualifying bonds, having closed its first transaction during COP27.
According to Afreximbank, if the LSF is fully implemented and scaled up over the course of five years, African sovereigns should save a substantial amount of money. The predicted savings would be in the neighborhood of US$11 billion.
