Africa Finance Corporation (AFC), the continent’s leading infrastructure solutions provider, has successfully issued a $500 million perpetual hybrid bond, demonstrating the corporation’s role as a leader in accessing global capital markets and financing transformative infrastructure projects across the continent.
This landmark transaction, which is AFC’s debut hybrid bond issue, was priced at a coupon of 7.50% with no fixed maturity, and attracted robust demand, peaking at US$1.1 billion in orders, and closed with 1.5 times oversubscription.
Experts believe that the successful issuance of the bond will further enhance AFC’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.
The AFC President and CEO, Samaila Zubairu, was quoted by African Press Organisation (APO) Group as saying that “this 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”, he added.
In his remarks, the corporation’s Executive Board Member and Head, Financial Services, Banji Fehintola, enthused: “This hybrid bond issuance represents a significant milestone for AFC and the continent. “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”, the finance expert added.
According to analysts, the 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.
It would be recalled that the corporation had 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. A year earlier, the Corporation welcomed its first non-African equity investor, Turk Eximbank, which invested US$110 million, its first investment in any African entity.
Experts noted that the AFC’s latest transaction reflected 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).
Joint Lead Managers for the issuance, which is projected to pave the way for more innovative financing solutions that unlock global capital and accelerate the continent’s economic transformation, are BofA Securities, Emirates NBD Capital, J.P. Morgan, Mashreq, MUFG and Societe Generale.
Information on the transaction indicated that its proceeds will be utilised to further strengthen the AFC’s capitalisation and balance sheet metrics to advance its mission to drive Africa’s structural transformation through high-impact projects such as 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.
