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Africa Finance Corporation Issues US$500 Mllion 7-year Eurobond

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  • Africa Finance Corporation Issues US$500 Mllion 7-year Eurobond

Africa Finance Corporation (AFC) has issued a US$500 million 7-year Eurobond. The senior, unsecured Eurobond which carries a coupon of 3.875 per cent was priced to yield at four per cent and matures in April 2024.

A statement from the AFC on Tuesday stated that the Eurobond received strong global interest, with an order book of US$2.4 billion. This showed that it was about five times over-subscription from 231 investors across the Middle East, Asia, the United Kingdom, Europe and the United States.

Prior to the launch of the bond, AFC conducted a roadshow in London, Hong Kong, Singapore, the UAE, and the United States.

The bond was AFC’s second benchmark Eurobond issuance under the Corporation’s US$3 billion Global Medium Term Note Programme. The bond was rated A3 by Moody’s Investor Services which is in line with AFC’s issuer rating. The bond will be listed on the Irish Stock Exchange. The Eurobond was distributed to investors in Europe (29%), United States (25%), United Kingdom (24%), Asia (18%) and the Middle East (4%).

AFC is only the second African development finance institution to issue a Eurobond with maturity longer than five years. This, the statement explained was a reflection of the corporation’s strong credit standing and its ability to match-fund medium to long-dated infrastructure investments.

Commenting on the issue, the President/Chief Executive Officer, AFC, Andrew Alli said: “AFC has been committed for the last ten years to investing in projects that drive sustainable growth and development in Africa. In that time, we have invested over US$4 billion in 28 African countries.

“Key to delivering this, are our fund-raising activities around the world, promoting the very real investment opportunities that exist in African infrastructure. The strong interest in this bond reflects investors’ confidence in AFC’s credit, strategy and risk management culture, as well as appetite for exposure to the returns available in African markets.”

Commenting on the issue, the Director and Corporate Treasurer of AFC, Banji Fehintola added: “After a successful debut Eurobond issuance in 2015, AFC has consistently engaged investors through a series of non-deal roadshows and other debt capital market issuances.

“The tremendous success of our second Eurobond issuance attests to the fact that investors continue to seek exposure to high quality, investment grade credits like AFC. This is indeed a solid endorsement of AFC’s strong business fundamentals, governance, funding strategy and risk management.”

Meanwhile, Hogan Lovells, a leading global law firm providing business-oriented legal advice and high-quality service across its breadth of practices to clients around the world is set to be the headline legal sponsor at AFC Live, a key industry infrastructure investment summit hosted by the AFC

The two-day infrastructure summit which is slated to hold in Abuja on the 15th and 16th May 2017, will include panel discussions and thematic debates, as well as case study presentations and interactive sessions centred on the African infrastructure revolution. Case studies will be shared in five key sectors: Energy & Power, Transport & Logistics, Telecommunications, Natural Resources and Heavy Industries. B2B meetings will provide a platform for participants to pitch to potential investors and financiers and a networking cocktail reception on the eve of the forum, as well as a Gala dinner will also be organised.

Partner and Head of Hogan Lovells’ Africa Practice, Andrew Skipper said: “ We are thrilled to be the lead legal sponsor for this event because we believe in and want to support business on the continent. Infrastructure plays an incredibly important part in any country’s growth story and in Africa, it is vital”.

Speaking further on the challenge of project funding, Andrew said: “African-focused DFIs, Export Credit Agencies or foreign grant funds cannot entirely fund the continent’s infrastructure needs. International investors and commercial lenders need to adjust their thinking on a range of issues in order to encourage an appropriate view on acceptable risk allocation and investor returns in these sometimes complex markets.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Posts 2% Gain for the Week Despite India Virus Surge

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Oil prices steadied on Friday and were set for a weekly gain against the backdrop of optimism over a global economic recovery, though the COVID-19 crisis in India capped prices.

Brent crude futures settled 0.28% higher at $68.28 per barrel and U.S. West Texas Intermediate (WTI) crude advanced 0.29% to $64.90 per barrel.

Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.

In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity.

However, crude imports by the world’s biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day (bpd), the lowest since December.

In the United States, the world’s largest oil consumer, jobless claims have dropped, signalling the labour market recovery has entered a new phase as the economy recovers.

The recovery in oil demand, however, has been uneven as surging COVID-19 cases in India reduce fuel consumption in the world’s third-largest oil importer and consumer.

“Brent came within a whisker of breaking past $70 a barrel this week but failed at the final hurdle as demand uncertainty dragged on prices,” said Stephen Brennock at oil brokerage PVM.

The resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of the lost demand has been offset by countries such as China, where recent Labour Day holiday travel surpassed 2019 levels.

“Gasoline demand in the U.S. and parts of Europe is faring relatively well,” FGE said.

“Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.”

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Lagos Commodities and Futures Exchange to Commence Gold Trading

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With the admission of Dukia Gold’s diversified financial instruments backed by gold as the underlying asset, Lagos Commodities and Futures Exchange is set to commence gold trading.

According to Dukia Gold, the instruments will be in form of exchange-traded notes, commercial papers and other gold-backed securities, adding that it will enable the company to deepen the commodities market in Nigeria, increase capacity, generate foreign exchange for the Nigerian government to better diversify foreign reserves and create jobs across the metal production value chain.

Tunde Fagbemi, the Chairman, Dukia Gold, disclosed this while addressing journalists at Pre-Listing Media Interactive Session in Lagos on Thursday.

He said, “We are proud to be the first gold company whose products would be listed on the Lagos Futures and Commodities Exchange. The listing shall enable us facilitate our infrastructure development, expand capacity and create fungible products.

“This has potential to shore up Nigeria’s foreign reserve and create an alternative window for preservation of pension funds. A gold-backed security is a hedge against inflation and convenient preservation of capital.”

“As a global player, we comply with the practices and procedures of London Bullion Market Association and many other international bodies. Our refinery will also have multiplier effects on the development of rural areas anywhere it is located,” he added.

Mr Olusegun Akanji, the Divisional Head, Strategy and Business Solutions, Heritage Bank, said the lender had created a buying centre for verification of quality and quantity of gold and reference price to ensure price discovery in line with the global standard.

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Crude Oil

Oil Nears $70 as Easing Western Lockdowns Boost Summer Demand Outlook

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Oil prices rose for a third day on Wednesday as easing of lockdowns in the United States and parts of Europe heralded a boost in fuel demand in summer season and offset concerns about the rise of COVID-19 infections in India and Japan.

Brent crude rose 93 cents, or 1.4%, to $69.81 a barrel at 1008 GMT. U.S. West Texas Intermediate (WTI) crude rose 85 cents, or 1.3%, to $66.54 a barrel.

Both contracts hit the highest level since mid-March in intra-day trade.

“A return to $70 oil is edging closer to becoming reality,” said Stephen Brennock of oil broker PVM.

“The jump in oil prices came amid expectations of strong demand as western economies reopen. Indeed, anticipation of a pick-up in fuel and energy usage in the United States and Europe over the summer months is running high,” he said.

Crude prices were also supported by a large fall in U.S. inventories.

The American Petroleum Institute (API) industry group reported crude stockpiles fell by 7.7 million barrels in the week ended April 30, according to two market sources. That was more than triple the drawdown expected by analysts polled by Reuters. Gasoline stockpiles fell by 5.3 million barrels.

Traders are awaiting data from the U.S. Energy Information Administration due at 10:30 a.m. EDT (1430 GMT) on Wednesday to see if official data shows such a large fall.

“If confirmed by the EIA, that would mark the largest weekly fall in the official data since late January,” Commonwealth Bank analyst Vivek Dhar said in a note.

The rise in oil prices to nearly two-month highs has been supported by COVID-19 vaccine rollouts in the United States and Europe.

Euro zone business activity accelerated last month as the bloc’s dominant services industry shrugged off renewed lockdowns and returned to growth.

“The partial lifting of mobility restrictions, the expectation that tourism will return in the near future, and the lure of the psychologically important $70 mark are all likely to have contributed to the price rise,” Commerzbank analyst Eugen Weinberg said.

This has offset a drop in fuel demand in India, the world’s third-largest oil consumer, which is battling a surge in COVID-19 infections.

“However, if we were to eventually see a national lockdown imposed, this would likely hit sentiment,” ING Economics analysts said of the situation in India.

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