US$100m repo facility agreed at COP28 to incentivise investments in Africa
04 December 2023 Abu Dhabi, Africa
Image: Frédéric Prochasson
The Abu Dhabi Investment Authority (ADIA) has agreed a US$100 million repo transaction with the Liquidity and Sustainability Facility (LSF) and the African Export-Import Bank (Afreximbank), within BNY Mellon’s Triparty Facility.
The transaction aims to increase the liquidity of African Sovereign Eurobonds and incentivise sustainable development goal (SDG)-related investments in Africa.
An initial US$50 million transaction related to a basket of seven African countries under the facility has been closed.
The LSF seeks to bring a well-developed repo market to the African continent, enhancing the liquidity of a diversified basket of Sovereign Eurobonds across 18 issuers.
Formed in 2021, the LSF aims to address the gap in market participation for financing Africa’s international sovereign debt, with a focus on green and SDG-linked issuance in maturities of up to 25 years.
Dhaen Al Hameli, executive director of the Core Portfolio Department at ADIA, says: “We believe that this new facility will contribute to lowering funding costs across the region, and encourage our peers to support the African bond market.”
Vera Songwe, founder and chairwoman of the LSF, comments: “Reducing the cost of funding is the only way Africa can accelerate its growth and fight climate change; this transaction is a step in that direction.”
Brian Ruane, CEO of Clearance and Collateral Management at BNY Mellon, adds: “This trade moves closer to the goal of creating a well-functioning repo market and the potential to help to improve African economic prosperity.
“Robust market infrastructure solutions result in financial markets becoming more resilient, scalable and less exposed to systemic risks, which contributes to realising new solutions that work beyond business and for society as a whole.”
The LSF is supported by USAID and Prosper Africa and was designed with the support of the United Nations Economic Commission for Africa.
The transaction aims to increase the liquidity of African Sovereign Eurobonds and incentivise sustainable development goal (SDG)-related investments in Africa.
An initial US$50 million transaction related to a basket of seven African countries under the facility has been closed.
The LSF seeks to bring a well-developed repo market to the African continent, enhancing the liquidity of a diversified basket of Sovereign Eurobonds across 18 issuers.
Formed in 2021, the LSF aims to address the gap in market participation for financing Africa’s international sovereign debt, with a focus on green and SDG-linked issuance in maturities of up to 25 years.
Dhaen Al Hameli, executive director of the Core Portfolio Department at ADIA, says: “We believe that this new facility will contribute to lowering funding costs across the region, and encourage our peers to support the African bond market.”
Vera Songwe, founder and chairwoman of the LSF, comments: “Reducing the cost of funding is the only way Africa can accelerate its growth and fight climate change; this transaction is a step in that direction.”
Brian Ruane, CEO of Clearance and Collateral Management at BNY Mellon, adds: “This trade moves closer to the goal of creating a well-functioning repo market and the potential to help to improve African economic prosperity.
“Robust market infrastructure solutions result in financial markets becoming more resilient, scalable and less exposed to systemic risks, which contributes to realising new solutions that work beyond business and for society as a whole.”
The LSF is supported by USAID and Prosper Africa and was designed with the support of the United Nations Economic Commission for Africa.
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