AFC boosts infrastructure lending with $500m bond issuance

Africa Finance Corporation (AFC), the continent’s leading infrastructure lender, has successfully priced a US$500 million perpetual hybrid bond.

The transaction, which is AFC’s debut hybrid bond issue, demonstrates AFC’s leadership in accessing global capital markets and financing transformative infrastructure projects across the continent.

Priced at a coupon of 7.50% with no fixed maturity, AFC’s maiden perpetual bond attracted robust demand, peaking at US$1.1 billion in orders, and closed with 1.5 times oversubscription.

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The issuance will further enhance AFC’s robust capital position while providing investors with certainty during the initial non-callable period of 5.25 years, after which the corporation will manage the bond in line with its financial strategy.

Daily Trust reports that AFC has sponsored projects in Nigeria across different sectors.

It provides financial and project structuring advice and funding for third-party development costs to advance the development of projects.

The corporation recently secured $200m for BUA Group to support growth in essential sectors and boost job creation.

With the new issue, AFC blended features of both equity and debt, the hybrid instrument – which offers 100% equity credit recognition from Moody’s Investor Services thereby strengthening AFC’s balance sheet while maintaining financial flexibility to support long-term growth.

“This landmark inaugural hybrid bond issuance underscores AFC’s unwavering dedication to advancing bold and transformative infrastructure projects across Africa,” Samaila Zubairu, President & CEO of Africa Finance Corporation, stated.

“Through innovative financial instruments, we are mobilising global capital to support Africa’s sustainable development, industrialisation and integration, notwithstanding tightening financial conditions.”

Executive board member and Head, Financial Services at AFC, Banji Fehintola said, “This hybrid bond issuance represents a significant milestone for AFC and the continent.”

“It demonstrates the confidence global investors have in AFC’s ability to deliver transformative development across Africa. By strengthening our equity base and diversifying our funding sources, we are well positioned to drive infrastructure solutions that accelerate Africa’s industrialisation and economic transformation.”

AFC’s perpetual non-call 5.25-year hybrid issuance creates a new benchmark for African institutions looking to diversify their funding sources and builds on the corporation’s proven expertise in structuring complex instruments that attract global investors and unlock new capital markets for the continent.