Africa Finance Corporation Issues $431 Million Digital Bond

Africa Finance Corporation Issues $431 Million Digital Bond

Africa Finance Corporation (AFC) has made history by issuing its first digital bond, raising a total of 350 million Swiss francs, equivalent to approximately $431 million. This issuance marks AFC as the first African institution to successfully complete such a transaction through a regulated exchange and central securities depository.

Details of the Digital Bond

The newly issued bond features a five-year maturity and carries a coupon rate of 1.4925%. Investor interest was strong, with about 90% of the demand coming from Swiss investors. The transaction was arranged by Commerzbank and Deutsche Bank, with the proceeds intended to support infrastructure financing across Africa.

Innovative Financing Structure

The bond was processed through the SIX digital platform, utilizing its capabilities for clearing and settlement. This approach is significant as it combines digital and traditional settlement methods, ensuring that ownership records and trading occur within a regulated framework.

Investor Demand and Market Impact

AFC’s digital bond attracted considerable attention from investors, with banks and financial institutions comprising 57% of the order book, while asset managers accounted for 37% and hedge funds contributed the remaining 6%. This demand is indicative of confidence in AFC’s credit profile and its strategic direction.

AFC’s Commitment to Innovation

Banji Fehintola, a member of the AFC executive board, emphasized that the digital format of the bond is part of the corporation’s broader commitment to embracing innovation within capital markets. AFC President and CEO Samaila Zubairu noted that this successful transaction reflects ongoing investor confidence in the institution, which has received strong ratings from S&P Global and Moody’s.

Future of Digital Bonds

The issuance of AFC’s digital bond comes at a time when globally, investment institutions are exploring similar models for tokenization of assets. By integrating digital elements with traditional finance, AFC is positioning itself at the forefront of a rapidly evolving market.

This digital bond is not just an isolated effort; it fits within AFC’s broader strategy of diversifying funding sources while continuing to support vital infrastructure projects across Africa.