By Rajive Singh
DUBAI: Africa Finance Corporation (AFC) has carried out a $150 million Islamic financing transaction on the Murabaha platform of Nasdaq Dubai, the international financial exchange serving the Middle East and Africa.
The transaction was executed to facilitate the issuance by AFC of a $150 million sukuk, which was the first US dollar sukuk to be issued by any multilateral African institution. It was also the first use of Nasdaq Dubai’s fast-growing Murabaha platform by an African entity.
Following high levels of investor interest, the initial target of $100 million was more than twice oversubscribed, resulting in the transaction being upsized to $150 million and a final order book of approximately $230 million.
The sukuk is AFC’s second foray into Islamic finance; the corporation accepted a $50 million 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.
Banji Fehintola, Corporate Treasurer of AFC, said: “Nasdaq Dubai’s pioneering Murabaha platform greatly facilitated the issuance of our Sukuk. It supported the strong demand that we received from global as well as regional investors and enabled us to upsize the proposed issuance size to its eventual 150 million US dollars. The platform enabled us to execute our Murabaha transactions swiftly and efficiently in a manner that was highly cost effective and provided us with Sharia’a-compliance certainty.”
Hamed Ali, Chief Executive of Nasdaq Dubai, said: “We are delighted to support AFC’s important activities in project development, financing and advisory work across Africa, for the benefit of its people and their economic well-being.
The exchange’s Sharia’a-compliant infrastructure is positioned to meet Islamic financing needs across the region and we look forward to expanding our services on behalf of a range of African public and private institutions.”
AFC’s Sukuk, issued on January 24, 2017, is the highest rated USD Sukuk issuance from an African entity. The privately placed Murabaha Sukuk was awarded an A3 senior unsecured rating by Moody’s Investors Service.
Since Nasdaq Dubai’s Murabaha Platform was launched in 2014, total transactions valued at more than 14 billion US dollars have taken place through it on behalf of an expanding number of corporate and individual users. Transaction value rose 37% in 2016 to reach 6.7 billion US dollars, up from 4.9 billion US dollars in 2015.
Significant advantages offered by the platform over alternative Murabaha channels include fixed price certificates with no spread. The platform utilises Sharia’a-compliant Certificates that are held in Nasdaq Dubai’s Central Securities Depository (CSD).