The United Nations Economic Commission for Africa (ECA) has unveiled a US$30bn facility to provide African governments with a liquidity structure on par with international standards meant to address the African continent’s specific Eurobond issuance needs.
The Liquidity and Sustainability Facility (LSF) is also intended to provide international private investors seeking to invest in Africa with a robust framework and a diversified range of opportunities particularly in line with the UN’s Sustainable Development Goals.
The LSF will be supported by Citi, who acted as structuring agent and provided expertise in setting up this facility, together with law firms White & Case LLP and Matheson and consultancy firm Eighteen East Capital.
The LSF is expected to lower the borrowing costs for African sovereigns by turning African sovereign bonds into liquid assets and enhancing African nations’ debt sustainability. It is estimated that the LSF will result in Africa saving up to US$11bn over the next five years on its borrowing costs.
A first transaction, which is expected to be announced in Q1 2022 for a total amount of US$200m is currently in progress and has received interest from a number of large international Asset Managers such as Amundi and is expected to be funded by Afreximbank.
Afreximbank president Benedict Oramah said the trade finance bank was “very pleased to be part of the first transaction of the Liquidity and Sustainability Facility”.
“We believe it will offer a strong opportunity to design a new financing paradigm for the Continent, one that will stimulate its economic growth and sustained development and attract diversified investments from the international community,” Oramah said.
Jay Collins, Vice Chairman of Banking, Capital Markets and Advisory for Citi, said: “We are focused on supporting emerging markets through a responsible and inclusive transition and our hope is that in the future this structure can be extended to other emerging markets.” *Business Times*