Africa Finance Corporation (AFC) Issues US$150 Million Maiden Sukuk

Africa Finance Corporation (AFC), a pan-African multilateral development finance institution and project developer, has issued its maiden Sukuk, the highest-rated ever Sukuk issuance from an African institution and in 2017, the first Sukuk to be issued by an African supranational entity.

Andrew Alli, President and CEO of AFC, commented on the announcement: “The core values of Islamic finance, the need to invest ethically in assets that have a tangible positive social impact, made a Sukuk issuance a natural choice for us. We offer global investors the chance to be involved in high-impact infrastructure projects that not only promote social and economic development across Africa but also generate economic returns for our investors.

“This Sukuk represents a milestone in our financing activities, a milestone that will enable us to further diversify our funding sources, to build new relationships with key investors in international markets and help us diversify our portfolio of projects to continue delivering real impact across the continent.”

Following high levels of investor interest, the initial target of US$100 million was more than twice oversubscribed, resulting in the transaction being upsized to US$150 million and a final order book of approximately US$230 million.

The Sukuk is AFC’s second foray into Islamic finance; the corporation accepted a US$50 million 15 year line of financing from the Islamic Development Bank (IDB) in 2015 to finance Islamic Finance-compliant projects located across the numerous African IDB member countries. The privately placed 100% Murabaha Sukuk, which has been awarded an A3 senior unsecured rating by Moody’s Investors Service, has a three year tenor and will mature on 24 January 2020.

Last year the corporation issued its debut Swiss Franc denominated long three-year bond, raising CHF 100 million, and accepted a US$150 million 15 year loan facility from KfW Development Bank. In 2015 AFC’s inaugural 144A/Reg S, US$750 million 5-year international bond was more than six times oversubscribed at over US$4.7 billion, attracting institutional investors from across Asia, Europe, Middle East and the United States.