Yen Bond: African Export-Import Bank’s ¥81.3bn six-part Samurai bond
Gateway to Africa
It is no small feat to introduce an African credit to picky Japanese investors, but multilateral financial institution African Export-Import Bank made a successful debut in the Samurai market and drew good demand from retail investors for an ¥81.3bn (US$521m) six-part Samurai deal.
The international yen market has been dominated by French issuers and US borrowers like Berkshire Hathaway, leaving little option for investors seeking more diversity.
Afreximbank made its debut as the first African issuer of a standalone Samurai bond since Central Bank of Tunisia in 2007.
Afreximbank is rated Triple B internationally, and Japanese investors are usually reluctant to take exposure to foreign credits with domestic ratings below Single A. But the multilateral institution obtained an A– bond rating from JCR solely for this transaction, allowing it to reach deeply into regional investors.
Without any credit enhancement, Afreximbank, with sole lead SMBC Nikko, courted investors by emphasising its key privileges such as the preferred creditor status and its solid profitability. The choice of the Samurai format as opposed to an issuer-friendly MTN programme helped draw wider demand, as the deal came with Japanese documentation.
The Cairo-headquartered borrower conducted physical investor meetings in Tokyo in November 2023 and September 2024 and virtual meetings in November 2024 before pricing the deal on November 14.
The deal enabled the issuer, which has been active in the Samurai loan market since 2017, to extend its footprint in Japan and diversify its financing sources.
The ¥67.2bn wholesale offering comprised ¥43.3bn 2.37% two-year, ¥18bn 2.64% three-year, ¥300m 2.83% five-year, ¥3.3bn 3.01% seven-year and ¥2.3bn 3.29% 10-year notes. Investor demand was focused on the two shorter-dated tranches thanks to the relatively attractive coupons. Afreximbank had marketed 15 and 20-year tranches but dropped them.
Notably, the transaction included a ¥14.1bn three-year retail portion. That size came close to the amounts that more established Samurai issuer Corporacion Andina de Fomento, a Latin American multilateral development bank, achieved from its earlier retail issue. Afreximbank’s retail bond is the first standalone retail Samurai from Africa.
Whereas many Samurai bond issuers in 2024 allocated about half their deals to offshore accounts, Afreximbank sold nearly 85% of its wholesale trade to Japanese investors, achieving its goal of expanding its investor base.
Most noteworthy was that it drew orders from nearly 150 accounts, showing that Afreximbank had won over a broad base of Japanese investors with its debut.
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