African Development Bank aims to boost local bond sales with new ETF

By Susanna Moon

Chicago, Dec. 9 – African Development Bank has hired MCB Investment Management as fund manager for African Domestic Bond ETF, a new portfolio that aims to promote local-currency bond issuance on the continent.

The fund is also the bank’s first multi-jurisdictional fixed-income exchange-traded fund in Africa

African Development Bank’s board of directors granted seed equity capital investment of $25 million for the ETF, according to an announcement by Mauritius Commercial Bank.

The main objective of the African Domestic Bond fund is “to encourage bond issuance in local currencies by facilitating access to local fixed-income markets for investors,” the release noted.

The fund will invest in government bonds and corporate bonds and will initially be listed on the Stock Exchange of Mauritius.

MCB “pioneered this area in early 2013 with the launch of the MCB Africa Bond Fund, an actively managed dollar-denominated fund that focuses on the local-currency bond markets of 13 countries in Africa. The fund has consistently outperformed its benchmark since inception and is up 9.52% in absolute terms this year,” according to the release.

African Domestic Bond fund is part of the bank’s aim to fortify African economies by easing their dependence on foreign-currency denominated debt, to provide more financing options and to “act as a catalyst for regional market integration.”

“In developing markets, it is particularly important for the lead institutions to act to reduce financial market impediments and instill local and international investor confidence,” Stefan Nalletamby, African Development Bank’s director for financial sector development, said in the press release.

African Development Bank is based in Abidjan, Ivory Coast.

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