UN agency launches African repo facility
05 November 2021 Africa
Image: AdobeStock/pomogayev
The United Nations Economic Commission for Africa (UNECA) has launched a short-term financing facility for African bonds.
The recently announced Liquidity and Sustainability Facility (LSF) will allow counterparties to use African fixed income securities in repo transactions, says a UNECA statement designed to align with the Glasgow COP26 climate-change summit.
This facility aims to improve sovereign access to international bond markets and to reduce liquidity premiums, potentially delivering savings of up to US$11 billion in borrowing costs for African governments over the coming five years.
The LSF repo service is now live, according to UNECA, and will potentially grow to a US$30 billion marketplace in the initial years of its operation. Several international asset managers have registered interest in participating in financing transactions via this facility.
The first transaction through this repo facility, a US$200 million trade funded by Afreximbank, is expected to close in Q1 2022.
Building on this model transaction, the LSF will potentially raise US$3 billion in “on lending” from developed countries following a special drawing rights (SDRs) package issued by the International Monetary Fund in August 2021. This US$650 billion SDR package forms part of emergency assistance from multilateral organisations designed to assist the ability of African countries to withstand and recover from the pandemic.
This short-term financing facility has grown from consultation undertaken by UNECA with African member countries designed to support their post-COVID recovery and their ability to build for future development.
The recently announced Liquidity and Sustainability Facility (LSF) will allow counterparties to use African fixed income securities in repo transactions, says a UNECA statement designed to align with the Glasgow COP26 climate-change summit.
This facility aims to improve sovereign access to international bond markets and to reduce liquidity premiums, potentially delivering savings of up to US$11 billion in borrowing costs for African governments over the coming five years.
The LSF repo service is now live, according to UNECA, and will potentially grow to a US$30 billion marketplace in the initial years of its operation. Several international asset managers have registered interest in participating in financing transactions via this facility.
The first transaction through this repo facility, a US$200 million trade funded by Afreximbank, is expected to close in Q1 2022.
Building on this model transaction, the LSF will potentially raise US$3 billion in “on lending” from developed countries following a special drawing rights (SDRs) package issued by the International Monetary Fund in August 2021. This US$650 billion SDR package forms part of emergency assistance from multilateral organisations designed to assist the ability of African countries to withstand and recover from the pandemic.
This short-term financing facility has grown from consultation undertaken by UNECA with African member countries designed to support their post-COVID recovery and their ability to build for future development.
← Previous repo article
Standard Chartered executes ESG ‘use of proceeds’ repo with Saudi National Bank
Standard Chartered executes ESG ‘use of proceeds’ repo with Saudi National Bank
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
