Africa Finance Corporation secures first global rating

Multilateral lender Africa Finance Corporation (AFC) has secured its first international credit rating from Moody’s Investors Service (Moody’s).

The lender has been in the market for more capital over the past four months, securing $380 million from international creditors for onlending to private businesses.

Moody’s has assigned the lender an A3 (long term) /P2 (short term) foreign currency debt rating with a stable outlook, making AFC the second highest investment grade rated multilateral financial institution in Africa.

“This rating, together with AFC’s strong capital position and the quality of its portfolio, will enable AFC to grow its balance sheet, broaden its asset base and expand its geographical footprint,” said AFC chief executive officer Andrew Alli on Monday.

In Kenya, AFC has invested in ARM Cement through a $50 million (Sh4.2 billion) loan issued in October 2012.

Syndicated loan

The loan came with the option of conversion to equity equivalent to 13.6 per cent of the cement firm within a six year period. The conversion price was set at a premium of 60 per cent above the share price at the time (Sh286) or Sh53.60 equivalent post split.

AFC was established in 2007 as a private sector-led Pan African multilateral development finance institution.

The founders, led by the then Nigerian Central Bank governor Charles Soludo, aiming to establish it as Africa’s equivalent to the International Finance Corporation (IFC), the World Bank’s private sector lending arm.

The lender invests in power, natural resources, heavy industry, transport and telecommunication sectors.

AFC’s 2013 funding programme totalled $700 million, with shareholders’ funds standing at $1.24 billion.

In December, AFC took a $250 million two-year syndicated loan from international lenders — three months after securing a $60 million debt from the German fund DEG and the Dutch development fund FMO. AFC also secured a $68 million credit line from French development fund PROPARCO in September 2013, having also received a 10-year $200 million funding facility from the African Development Bank in October 2012.

AFC has in turn provided a $668 million credit line in debt and equity financing to Ethiopian Airlines for acquisition of five Boeing 777 aircraft, $90 million for the 26MW Cabeolica power project in Cape Verde, and $65 million in Nigerian oil drilling firm Depthwize Ltd.

It has also invested $37 million in the Main One fibre optic cable project connecting West Africa to Europe, the Bakwena toll road project in South Africa and the 270 million Euro Konan Bedie toll bridge in Ivory Coast.