The African Export-Import Bank (Afreximbank) has been recognised with a much-coveted “Sustainable Deal of the Year” award for its pioneering work in the establishment and development of the Liquidity and Sustainability Facility (LSF), a vehicle that seeks to increase liquidity and demand for Eurobonds issued by African Sovereigns. Issued by Uxolo Global 2023: Development and Impact Finance and co-hosted by TXF, the award highlights the positive impact which increased demand for these Eurobonds can have in promoting investments in sustainable infrastructure and development across Africa. The LSF seeks to harness and infuse enhanced liquidity into Africa’s financial markets by contributing to the development of a larger repurchase agreement (“repo”) market on the continent from the current low level, relative to developed markets. Deep and mature repo markets in developed economies help lower the cost of borrowing and increase debt sustainability for Sovereign bond issuers.
In November 2022, Afreximbank, as a funding and strategic partner, advanced a $200-million revolving loan facility to the LSF, acting as a funding counterparty in the framework of African Sovereign Eurobonds repo transactions. The facility was renewed in 2023 for new transactions. With the $200-million seed funding and employment of best-in-class service providers, the LSF is targeting to raise up to US$5 billion of financing in the medium term. Welcoming the award, Prof. Benedict Oramah, President and Chairman of Afreximbank, said that the Bank’s support to the LSF is a reflection of its continuing commitment to positively impact Africa’s financial markets. “Afreximbank will continue to work on initiatives such as the LSF to enhance the level of markets liquidity on the continent,” said Prof. Oramah. “This is essential in order to achieve cost and interest savings and increase debt sustainability for African governments.”
Having closed its inaugural transaction at COP27, the LSF is now actively working with owners of African Sovereign Eurobonds and funding counterparties to bring liquidity to a universe of more than 120 eligible bonds. Afreximbank announced that activities of the LSF were expected to result in significant interest savings by African sovereigns, which was estimated to be in the region of $11 billion over five years with full implementation and scaling of the LSF.
