Regional institution, Africa Finance Corporation (AFC), has secured an inaugural Asian-currency denominated loan facility valued at up to $150 million, the organization disclosed in a press release.
The Dual Currency Samurai Term Loan Facility, which was launched into general syndication on July 23, 2019, comprises two tranches (USD denominated Tranche A and JPY denominated Tranche B) with a tenor of three years each (bullet repayment).
News of the loan facility broke out after the recently concluded Tokyo International Conference on African Development (TICAD) held on August 28 – 30, 2019, at Yokohama city in Japan. The signing of the loan agreement will hold today, September 2, 2019.
Acting as the Mandated Lead Arranger (MLA) and Bookrunner for the syndicated loan are MUFG Bank, Ltd. (Japan’s largest bank) and Japanese multinational banking and financial services company, Sumitomo Mitsui Banking Corporation (SMBC). The MLA is the investment bank or underwriter firm that facilitates and leads a group of investors in a syndicated loan for major financing.
The deal was reportedly well received in the Japanese loan market leading to a significant over-subscription. Closing the Yen-denominated facility represents an important step as AFC builds a broad coalition of investors to diversify its sources of funding towards the Far East.
“The Japanese loan market’s overwhelming interest in the Facility, leading to its oversubscription, allows us to diversify our funding sources and supports our mandate of providing transformational solutions to Africa’s infrastructure deficit,” President and CEO of AFC, Samaila Zubairu said.
Moreover, the diversification allows more institutions from around the globe to participate in Africa’s development as regards financing. According to the release, proceeds from the instrument will be used for general corporate purposes in accordance with AFC’s Establishment Agreement and the Charter.
Zubairu added that “Asia is key to Africa’s growth. Japan, in particular, is an important player and its guiding principles – quality growth, which focuses on inclusiveness, sustainability, and resilience as well as human security, which focuses on capacity building – are completely aligned with AFC’s mission and vision.”
Africa Finance Corporation (AFC) is an investment grade multilateral finance institution established in 2007 to be the catalyst for private sector-led infrastructure investment across Africa. To date, the Corporation has invested over $4.5 billion in projects within 29 countries across the continent.
AFC’s investment approach (mostly in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications) combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth.