Africa Finance Corporation (AFC), a pan-African multilateral development finance institution and project developer, has issued its maiden Sukuk, the highest-rated Sukuk issuance from an African institution.

Andrew Alli, President and CEO of AFC, said: “This Sukuk represents a milestone in our financing activities 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 $100m was more than twice oversubscribed, resulting in the transaction being upsized to $150m and a final order book of approximately $230m. 

In addition to being the first Sukuk transaction of 2017, it is also the first Sukuk to be issued by an African supranational entity.

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 January 24, 2020. 

The Sukuk is AFC’s second foray into Islamic finance.

The corporation accepted a $50m 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 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,” Alli said.

Emirates NBD Capital, MUFG and RMB acted as joint bookrunners and joint lead managers with Emirates NBD Capital also acting as the sole global coordinator.

Ahmed Al Qassim, CEO of Emirates NBD Capital, said: “Emirates NBD Capital is delighted to have supported the inaugural $150m 3 year Sukuk issuance. The successful completion of the transaction is a testament to AFC’s standing with the international investor community and AFC’s commitment to develop new sources of funding.