…Priced at a coupon of 7.50% with no fixed maturity, AFC’s maiden perpetual bond attracted robust demand, peaking at US$1.1 billion in orders, and closed with 1.5 times oversubscription
…BofA Securities, Emirates NBD Capital, J.P. Morgan, Mashreq, MUFG and Societe Generale acted as Joint Lead Managers for the issuance
WED JAN 15 2025-theGBJournal| Africa Finance Corporation (AFC), Africa’s leading infrastructure solutions provider, has successfully priced a US$500 million perpetual hybrid bond.
The landmark transaction, which is AFC’s debut hybrid bond issue, demonstrates AFC’s leadership in accessing global capital markets and financing transformative infrastructure projects across the continent.
Priced at a coupon of 7.50% with no fixed maturity, AFC’s maiden perpetual bond attracted robust demand, peaking at US$1.1 billion in orders, and closed with 1.5 times oversubscription.
AFC said the issuance will further enhance it’s robust capital position while providing investors with certainty during the initial non-callable period of 5.25 years, after which the Corporation would manage the bond in line with its financial strategy.
”By blending features of both equity and debt, the hybrid instrument – which offers 100% equity credit recognition from Moody’s Investor Services – strengthens AFC’s balance sheet while maintaining financial flexibility to support long-term growth,” AFC said in a statement today.
According to Samaila Zubairu, President & CEO of Africa Finance Corporation, The landmark inaugural hybrid bond issuance underscores AFC’s unwavering dedication to advancing bold and transformative infrastructure projects across Africa.”
“Through innovative financial instruments, we are mobilising global capital to support Africa’s sustainable development, industrialisation and integration, notwithstanding tightening financial conditions.”
“This hybrid bond issuance represents a significant milestone for AFC and the continent,” said Banji Fehintola, Executive Board Member and Head, Financial Services at AFC.
“It demonstrates the confidence global investors have in AFC’s ability to deliver transformative development across Africa. By strengthening our equity base and diversifying our funding sources, we are well positioned to drive infrastructure solutions that accelerate Africa’s industrialization and economic transformation.”
AFC’s perpetual non-call 5.25-year hybrid issuance creates a new benchmark for African institutions looking to diversify their funding sources and builds on the Corporation’s proven expertise in structuring complex instruments that attract global investors and unlock new capital markets for the continent. AFC last year secured a US$1.16 billion syndicated loan, its biggest international transaction to date, attracting first-time lenders across Europe, the Middle East and Asia. In 2023, the Corporation welcomed its first non-African equity investor, Turk Eximbank, which invested US$110 million, its first investment in any African entity.
AFC’s latest transaction reflects growing confidence in hybrid bonds as a financing tool for multilateral development banks, following the African Development Bank’s (AfDB) inaugural hybrid issuance last year (first hybrid ever to be issued by an MDB).
BofA Securities, Emirates NBD Capital, J.P. Morgan, Mashreq, MUFG and Societe Generale acted as Joint Lead Managers for the issuance.
Proceeds from the transaction will be utilised to further strengthen the Corporation’s capitalisation and balance sheet metrics to advance AFC’s mission to drive Africa’s structural transformation through high-impact projects like the Lobito Corridor Rail Project, which connects resource-rich, landlocked countries to global markets; the Red Sea Power Project, which is helping Djibouti achieve full renewable energy reliance; and Arise Integrated Industrial Projects, which reduce import dependency while creating high-value jobs.
AFC’s hybrid bond issuance will pave the way for more innovative financing solutions that unlock global capital and accelerate the continent’s economic transformation.
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