A USD 140 million Korea-focused loan facility launched reflects continued Asian interest in African investments.
Africa Finance Corporation (AFC), the Lagos-headquartered development finance institution (DFI), has secured the close of a USD 140 million South Korea-focused loan facility, which it will use for general investment.
Launched for general syndication on 16 September, with the loan agreement signed on 14 November, the Kimchi Loan Facility is the first such facility launched by the DFI to focus on South Korea but is not its first to focus on Asia. September this year saw the close of the Samurai Term Loan Facility, a dual-currency facility made up of USD 233 million and JPY 1 billion, organised through the Export-Import Bank of China (CEXIM).
CEXIM also provided loans worth USD 300 million to AFC in 2018.
AFC also sold USD 244 million in Eurobond issuances to Asian investors this year, and has received investments totalling USD 1.2 billion from China, Hong Kong, Singapore, Malaysia, and Taiwan.
AFC president and chief executive Samaila Zubairu said in a statement that the South Korean debt markets “have highly selective investment criteria” and that combined with the recent close of the Japan-focused Samurai Loan Facility “signifies the East’s growing appetite for African investments, which are particularly attractive considering today’s negative-yield environment”.
He continued: “We look forward to continued engagement with South Korea as well as the other Asian markets that understand the opportunity that is available through Africa’s unprecedented development.”
The London offices of Seoul-headquartered Shinhan Bank and Johannesburg-headquartered Nedbank were the bookrunner and mandated lead arrangers, respectively. South Korean banks KEB Hana Bank and NongHyup Bank were another mandated lead arranger and lead arranger, while First Abu Dhabi Bank PJSC acted as agent.
AFC treasurer, Banji Fehintola commented: “Asia is a very important region for us and the participation of Asian investors in our bond issuances has been growing significantly over time. The Kimchi and Samurai Loan Facilities that we closed this year further exemplify AFC’s wide market access and innovation in mobilising global capital to execute projects and transform the lives of people in Africa.”
That Asian interest has included large amounts of Japanese private sector investment, Chinese state-driven investment, either through the Belt and Road Initiative or external projects, and interest from South Korea itself.
Last month, Cameroon received USD 200 million in credit from the World Bank, whose annual Doing Business report recently revealed that although progress has been made in improving the continent-wide business climate, much more work remains to be done.
This article first appeared on African Law and Business. Published by Andrew Mizner on the 21st of November 2020