- AfDB Okays $10million Bond Support Fund
Board of the African Development Bank (AfDB) has approved $10 million to the African Local Currency Bond Fund (ALCB Fund), to further enhance its portfolio and promote the development of domestic capital markets across the continent.
The loan with a seven-year tenor including a two-year grace period, will support opportunities for local African corporate issuers to access and diversify their long-term funding sources in local currency and crowd in local institutional investors.
The ALCB Fund was incorporated in December 2012 by German Development Bank (KfW) on behalf of the German Federal Ministry of Economic Cooperation and Development and is licensed as an open-ended Fund, domiciled in Mauritius with initial paid-in capital of $47 million.
The Fund is designed to promote local currency bond issuers in high-impact sectors by providing technical assistance to facilitate corporates bond issuances and champion best practice across various domestic debt markets.
Geographically, the Fund is expected to invest in all African countries where local currency bonds are possible. It has invested in Botswana, Ghana, Kenya, Zambia, Lesotho, Senegal, Côte d’Ivoire, Nigeria, Uganda, Malawi, Gabon and Togo. As of December 31, 2017, the Fund had made 27 investments across 19 companies and in 10 currencies.
The products and services offered by the ALCB Fund are designed to improve access for non-sovereign issuers to long-term funding in local currency, reduce currency and maturity mismatches and increase local financial intermediation.