Afreximbank signs N300bn domestic bonds programme

The rise of domestic bonds by development finance institutions within Nigeria attest to the market's growth, points to a deep and liquid bond market and issuers looking to raise long term capital. That’s according to Kobby Bensti-Enchill, Executive Director, and Head of Debt Capital Markets for West Africa at Stanbic IBTC Capital. He spoke to CNBC Africa’s Christy Cole at the signing ceremony of the Afreximbank N300 billion bonds programmes.

Wed, 29 Jan 2020 12:12:45 GMT

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AI Generated Summary

The decision by Africa Export Import Bank to launch a 300 billion naira domestic bond program signifies a strategic move towards mitigating foreign exchange risks and promoting long-term local currency financing for projects in Nigeria.
The shift towards domestic bond offerings by development finance institutions reflects a growing trend in the Nigerian capital markets, which are characterized by depth, liquidity, and increased interest from issuers seeking long-term capital.
The initiative by Afreximbank sets a precedent for other DFIs in Africa, encouraging them to explore alternative funding mechanisms that leverage local markets and contribute to the sustainable development of economies across the continent.

Africa Export Import Bank's recent establishment of a bond program for 300 billion naira has ignited discussions around the future of funding for projects in Nigeria. Under this program, Africa will issue bonds tailored to various projects until the 300 billion naira limit is fully utilized. This move comes at a significant juncture when Africa is embarking on its first-ever domestic bond offering in Nigeria, amidst a time of critical currency fluctuations. The decision to opt for a domestic bond offering instead of borrowing in dollars not only mitigates foreign exchange risks but also demonstrates a strategic shift towards long-term, local currency financing. Kobby Bensti-Enchill, Executive Director and Head of Debt Capital Markets for West Africa at Stanbic IBTC Capital, highlighted the importance of this initiative, especially in the context of managing foreign exchange risk and boosting confidence in the Nigerian capital markets. The rise of such domestic bonds by development finance institutions signals a transformative trend in funding mechanisms and sets the stage for a new era of capital market development in Nigeria and beyond. This progressive move by Afreximbank serves as a blueprint for future interventions by DFIs across Africa, indicating a growing recognition of the benefits and opportunities presented by investment in local markets. The deepening and liquidity of the Nigerian bond market, coupled with the increasing interest from issuers seeking long-term capital, bodes well for the country's economic growth and financial stability. As institutions like Afreximbank lead the way in embracing domestic bond programs, the financial landscape in Nigeria is set to witness a significant transformation, paving the way for sustainable and resilient funding mechanisms for a range of projects and initiatives.