Africa Finance Corporation (AFC) is planning a transaction involving at least $500 million in synthetic asset-backed securities Synthetic ABS allows lenders to transfer loan-loss risks to investors, such as pension and hedge funds, via credit-linked notes The corporation recently priced a $500 million perpetual hybrid bond and plans to enter the panda bond market
Africa Finance Corporation (AFC) is planning a transaction involving at least $500 million in synthetic asset-backed securities (ABS), according to Banji Fehintola, AFC’s head of financial services and executive board member.
Synthetic ABS allows lenders to transfer loan-loss risks to investors, such as pension and hedge funds, via credit-linked notes while keeping the underlying assets on their books.
The deal is part of AFC’s broader push to diversify funding sources and enhance lending capacity for large-scale infrastructure projects. The corporation recently priced a $500 million perpetual hybrid bond and plans to enter the panda bond market for renminbi-denominated debt.
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Key Takeaways
Synthetic ABS aligns with G20 recommendations to increase securitization to address financial challenges in emerging markets. AFC is also exploring cash asset-backed securities, Fehintola said.AFC aims to become a regular debt issuer in Chinese currency, complementing its existing dollar and yen issuances. The corporation is backing major infrastructure projects, including the Xlinks Morocco-UK renewable energy initiative and a US-supported railway linking Zambia’s mining region to Angola’s Lobito port. These projects will involve syndication with a consortium of banks.
