African development finance institution, the Africa Finance Corporation (AFC), has announced that it has successfully priced its first ever perpetual hybrid bond issue. This issue has a value of $500-million. A hybrid bond blends features of both debt and equity. The AFC focused on funding infrastructure projects in the core sectors of heavy industry, natural resources, power, telecommunications and transport, and by issuing the hybrid bond it had strengthened its balance sheet while retaining financial flexibility.

“This landmark inaugural hybrid bond issuance underscores AFC’s unwavering dedication to advancing bold and transformative infrastructure projects across Africa,” highlighted AFC president and CEO Samaila Zubairu. “Through innovative financial instruments, we are mobilising global capital to support Africa’s sustainable development, industrialisation and integration, notwithstanding tightening financial conditions.”

The perpetual hybrid bond, which has no fixed maturity, was priced at a coupon of 7.5%. The bond was oversubscribed by 1.5 times, and attracted $1.1-billion in orders. The initial non-callable period was 5.25 years, following which the AFC would manage it in accordance with its financial strategy.

“This hybrid bond issuance represents a significant milestone for AFC and the continent,” affirmed AFC executive board member and financial services head Banji Fehintola. “It demonstrates the confidence global investors have in AFC’s ability to deliver transformative development across Africa. By strengthening our equity base and diversifying our funding sources, we are well positioned to drive infrastructure solutions that accelerate Africa’s industrialisation and economic transformation.”

High-impact projects in which the AFC has been involved include the Lobito Corridor Rail project, to link resource-rich but landlocked Zambia and effectively landlocked southern Democratic Republic of Congo to the Angolan port city of Lobito. Another project is the Red Sea Power Project, which will help Djibouti to be able to rely entirely on renewable energy. Yet another project set were the Arise Integrated Industrial Projects, which reduced dependence on imports and created high-value jobs.

The AFC was founded in 2007 and now had 44 member countries.