AFC issues $500mn 144A/REG S Eurobond

The Africa Finance Corporation (AFC) recently made a remarkable return to the Eurobond market after a three-year absence by successfully issuing a 500-million-dollar Eurobond. In an interview with CNBC Africa, Modupe Famakinwa, AFC’s Senior Vice President for Corporate Funding, emphasized the significant confidence investors have in AFC’s fund, with the bond being oversubscribed and attracting over 100 investors. Famakinwa highlighted the critical role of accessing global capital markets for the AFC, noting that the cost of funding is a key factor that guided their timing for re-entry into the market. The AFC's engagement efforts with investors across various regions during their absence paid off, as reflected in the strong investor confidence in AFC’s credit. Famakinwa also discussed the geographical distribution of investors in the recent bond issuance, with notable interest from Europe, America, Asia, and the Middle East. The AFC's strong credit rating and recently improved outlook by Moody's played a significant role in boosting investor sentiment. Famakinwa explained that Moody's outlook change from negative to stable reflects the management's efforts in navigating a volatile operating environment successfully. The AFC's strong liquidity ratios and low Non-Performing Loans (NPL) further affirmed the confidence in AFC's credit and outlook for the future. The AFC's strategic use of the bond proceeds focuses on general corporate purposes to provide liquidity for disbursement when needed, particularly in key sectors like energy, oil and gas, telecommunications, and transport and logistics. Famakinwa also delved into the pricing strategy that enabled the AFC to achieve a tight spread in the bond issuance. By engaging actively with investors globally and showcasing the organization's governance structure and impact on the continent, AFC built investor confidence over time. The timing of the issuance amid the Federal Reserve's rate cuts and expectations of further rate hikes also worked in AFC's favor. Famakinwa highlighted the AFC's readiness to seize market opportunities efficiently, emphasizing the importance of being prepared to access funding in a timely manner. Furthermore, the successful AFC bond issuance is set to pave the way for other African issuers in the market. As a market leader, AFC aims to not only raise funds for its own projects but also to open doors for other issuers in the region. The AFC's ability to communicate a strong credit story and engage with investors effectively sets a positive precedent for other institutions looking to access the market. With hopes of more African institutions following suit and accessing the market at reasonable rates, the AFC stands as a beacon of investor confidence and market leadership in Africa.