Euroclear and the Liquidity and Sustainability Facility (LSF) have joined forces to create an interbank repo solution to support African sovereign eurobonds.
The new facility will sit within Euroclear’s triparty platform.
With the creation of the new standardised triparty basket dedicated to African sovereign
eurobonds, ‘LSF GC Africa Euroclear’, the two firms aim to create an interbank flow market within the African repo market.
This basket, which reflects more than 120 sovereign African eurobonds that the LSF accepts as collateral in repo transactions, is designed to allow investors to trade in a standardised and high-quality framework on a wide range of African eurobonds.
Commenting on the announcement, Bernard Ferran, chief commercial officer at Euroclear, says: “In our role as a financial market infrastructure, we are pleased to be able to work with our colleagues at the LSF to bring this new solution to market.
“We believe this triparty basket could provide a new avenue for international investment in Africa creating market efficiencies and driving increased liquidity.”
David Escoffier, CEO of the LSF Secretariat, adds: "This new phase for the LSF, thanks to the creation of a global community of African eurobond holders, and the coordination of a diversified pool of specialised counterparties on the repo market, enables liquidity in this asset class to be concentrated and organised efficiently.”
The LSF was designed with the support of the United Nations Economic Commission for
Africa and Afreximbank.
Its dual objective is to support the liquidity of African sovereigns eurobonds and incentivise Sustainable Development Goals-related investments, such as GSS bonds on the African continent.
