African Export-Import Bank to Sell Eurobonds, Borrow in Renminbi

The African Export-Import Bank plans to raise more than $1 billion in bonds and loans and is considering borrowing in renminbi as trade with China rises.

A Eurobond of $400 million to $600 million may be sold as soon as this month, Jean-Louis Ekra, president of the Cairo-based lender, said in Abidjan, Ivory Coast, where it opened its third regional office after Harare in Zimbabwe and Abuja in Nigeria. The company will seek $400 million to $500 million in loans from 35 banks later this year, he said.

“We want to help the regional economies grow by supporting the private sector,” he said on May 28. “We plan to raise funds in the Chinese currency because of increasing trade between Africa and China.”

Afrexim is considering borrowing in Chinese renminbi to take advantage of rising trade in Africa with China, which is the top trading partner of Africa’s five-largest economies, including South Africa, Nigeria and Angola. The lender, started in 1993, is raising debt as borrowing costs on existing bonds drop to record lows and companies across sub-Saharan Africa issue Eurobonds to benefit from a global hunt for yield.

Rates on Afrexim’s $700 million of notes due July 2019 dropped 115 basis points, or 1.15 percentage points, this year to an all-time low of 4 percent last week.

Companies in the world’s least-developed continent issued $2.8 billion of dollar-denominated debt in 2015, the best start to a year since 2011, as investors take their search for returns further afield amid dwindling gains elsewhere. Interest in African debt is being driven partly by falling yields in other emerging markets, in turn spurred by record-low developed-nation interest rates.

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