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Africa Finance Corp, an infrastructure-focused development finance institution, is considering issuing bonds in currencies from the continent and is in talks to sell securities in South Africa’s rand.
The Lagos-based institution, which has more than US$12,3 billion in assets, has to date only sold bonds denominated in dollars and Swiss francs, according to data compiled by Bloomberg.
“South Africa is on the table, we are in discussions,” Chief Executive Officer Samaila Zubairu said in aninterview.
“Two other countries have made an approach.”
Selling bonds denominated in local currency protects borrowers from the risk of exchange-rate depreciation while securities denominated in major currencies such as the dollar can make repayments harder to meet.
“It’s one of the ways for us to derisk infrastructure investment. The earnings are in local currency, the funding should be in local currency,” Zubairu said.
“Definitely its on the cards, we actually have a program for that and we are looking at how to make it happen.”
The AFC declined to comment further when contacted by Bloomberg. South Africa’s National Treasury didn’t immediately respond to a query.
The AFC last week launched a report on African infrastructure investment that showed the continent lags the rest of the world in terms of spending on everything from energy to roads and digital infrastructure. Investments that have been made primarily connect facilities such as mines to ports rather than facilitating trade within and between countries, the authors of the report found. — Bloomberg.
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