The African Development Bank (AfDB) is planning to sell Kenya-shilling bonds at the Nairobi bourse almost three months after an international ratings service gave it the highest quality rating.
Disclosures contained in a statement from the African Securities Exchanges Association’s latest annual general meeting indicate that the multilateral lender has already engaged the Nairobi, Dar-es-Salaam and Accra exchanges where it intends to issue bonds in local currency.
AfDB will join two other multilateral agencies in NSE bond issuance. African states-owned housing agency Shelter Afrique and regional long-term financier East African Development Bank have issued such bonds in the local bourse for years.
In July this year, the Tunis-headquartered multinational lender sold Ugsh12.5 billion (Sh431.03 million) worth of bonds at the Uganda Securities Exchange as part of Ugsh125 billion (Sh4.3 billion) medium term programme.
“The African Development Bank had already listed a local currency bond at the Ugandan Securities Exchange. The bank has started discussions to launch local currency bonds with Nairobi Securities Exchange, Dar es Salaam Stock Exchange and Ghana Stock Exchange,” notes the disclosures from the annual general meeting.
In September, Moody’s Investor Service gave the lender a triple A (AAA) rating indicating that its securities have minimal credit risk and in the previous month, the multilateral lender indicated that it was planning to issue $40 billion (Sh3.4 trillion) through bonds for infrastructure projects in Africa.
The global ratings service said that AfDB is financially strong and has substantially reduced debt levels, is prudently run and has strong shareholder support.
“These strengths offset the relative low average credit quality of the AfDB’s loan portfolio, a result of the bank’s challenging regional operating environment,” said Moody in a research note released September.
Moody’s said that the AfDB’s arrears-clearance mechanisms and the Heavily Indebted Poor Countries (HIPC) debt-relief programme have helped to substantially reduce the level of outstanding arrears.
It however said that AfDB’s impaired assets are still relatively high for an AAA-rated multilateral development bank. These mainly relate to arrears from countries no longer eligible to borrow from the bank.
The African Securities Exchanges Association AGM bringing together representatives from 22 African securities exchanges was held a day before the organisation held its annual conference where FTSE Group, a global index provider, launched a Pan African Index.
The market capitalisation weighted index series measures the performance of securities in the following: Botswana, Cameroon, Cape Verde, Egypt, Ghana, Ivory Coast, Kenya, Libya, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, Sudan, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe.
Country weights are capped at 20 per cent to ensure the index maintains a fair representation of securities from each country.
AfDB has been a major financier of infrastructure projects with the Thika Superhighway and Athi River Namanga road being the showcases.
