Africa Finance Corp Plans $300M Islamic Bond as Gulf Interest Rises
TLDR
- Africa Finance Corporation (AFC) to issue $300 million Islamic bond by year’s end, targeting Gulf nations for African infrastructure projects.
- First Abu Dhabi Bank to coordinate issuance, with Emirates NBD Capital and SMBC as lenders.
- AFC strengthening Gulf ties through collaborations with Arab Bank, Saudi Export-Import Bank, and Saudi Fund for Development.
Africa Finance Corporation (AFC) plans to issue its first Islamic bond in nearly a decade, aiming to raise $300 million by year’s end. Founded in 2007 and based in Nigeria, the firm serves as an alternative to the African Development Bank, having provided $13 billion across 36 African countries.
The issuance will target growing demand from Gulf nations to fund African infrastructure projects, with First Abu Dhabi Bank serving as the global coordinator, and Emirates NBD Capital and SMBC among other lenders.
AFC’s CEO, Samaila Zubairu, highlighted increased Gulf interest, with 15% of AFC’s recent $500 million Eurobond allocated to Middle Eastern investors. AFC is deepening ties in the Gulf through collaborations, including with equity shareholder Arab Bank for Economic Development in Africa and recent agreements with the Saudi Export-Import Bank and Saudi Fund for Development.
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Key Takeaways
AFC’s Islamic bond issuance reflects Africa’s strengthening financial ties with the Gulf, as African nations align with Saudi Arabia's Vision 2030 goals, which emphasize diversifying away from oil. Africa is well-positioned to supply Saudi Arabia with materials to support this economic transition. AFC’s collaborations with Gulf institutions signal a growing commitment to joint infrastructure financing, crucial for Africa’s development. AFC’s bond issuance is part of a broader fundraising effort, with a $2.8 billion debt target for 2024 and a $4 billion goal for 2025. The institution, which recently sold a stake to Turkiye Ihracat Kredi Bankasi, is exploring additional sales to non-African shareholders to diversify its investor base and boost investments.
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