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.

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Points clés à retenir

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