Infrastructure Lender AFC Eyes $500M Emerging Market Securitization

Daba Finance/AFC Plans $500M Synthetic ABS Deal to Expand Lending Capacity

BREAKING NEWSJanuary 20, 2025 at 11:07 AM UTC

TLDR

Africa Finance Corporation (AFC) is planning a transaction involving at least $500 million in synthetic asset-backed securities
Synthetic ABS allows lenders to transfer loan-loss risks to investors, such as pension and hedge funds, via credit-linked notes
The corporation recently priced a $500 million perpetual hybrid bond and plans to enter the panda bond market

Africa Finance Corporation (AFC) is planning a transaction involving at least $500 million in synthetic asset-backed securities (ABS), according to Banji Fehintola, AFC’s head of financial services and executive board member.

Synthetic ABS allows lenders to transfer loan-loss risks to investors, such as pension and hedge funds, via credit-linked notes while keeping the underlying assets on their books.

The deal is part of AFC's broader push to diversify funding sources and enhance lending capacity for large-scale infrastructure projects. The corporation recently priced a $500 million perpetual hybrid bond and plans to enter the panda bond market for renminbi-denominated debt.

You can follow Daba’s reporting on Africa on WhatsApp. Sign up here

Key Takeaways

Synthetic ABS aligns with G20 recommendations to increase securitization to address financial challenges in emerging markets. AFC is also exploring cash asset-backed securities, Fehintola said.AFC aims to become a regular debt issuer in Chinese currency, complementing its existing dollar and yen issuances. The corporation is backing major infrastructure projects, including the Xlinks Morocco-UK renewable energy initiative and a US-supported railway linking Zambia’s mining region to Angola’s Lobito port. These projects will involve syndication with a consortium of banks.

Finance

AFC

Africa Finance Corporation

Synthetic ABS

Infrastructure Financing

Bonds

Capital Markets