Abidjan & Washington, DC, December 11, 2006—
The International Finance Corporation, the private sector arm of the World Bank Group, announced today that it has become the first nonresident international financial institution to issue a CFA franc-denominated bond in West Africa. The XOF 22 billion ($44.6 million equivalent) five-year bond was placed with institutional investors in the eight West African Economic and Monetary Union member countries. The bond carries a 4.75 percent coupon rate and was issued at 100 percent of face value. The lead manager is BICI Bourse (Group BNP Paribas). Six local financial institutions played the role of “partner bank” in the distribution of this bond: Banque de Développement du Mali, BIAO, Bank of Africa, Banque Sénégalo-Tunisienne, Compagnie Banquaire de l’Afrique Occidentale, and Ecobank.
This issue is IFC’s first local currency bond offering in Sub-Saharan Africa. By issuing in domestic capital markets IFC is providing a model for future issuers, helping deepen the capital markets, and supporting long-term local currency financing for local companies that will benefit from the proceeds. The beneficiaries include, Sococim in Senegal, Societe Malienne de Promotion Hoteliere in Mali, Societe Burkinabee de Promotion Hoteliere in Burkina Faso, and Tropical Rubber in Côte d’Ivoire. A special effort was made to achieve the broadest possible distribution throughout the CFA zone among investors to include in this issue. IFC continues its search for promising private sector projects to finance throughout West African Economic and Monetary Union countries.
“IFC is proud to play a role in encouraging the opening of the West African bond markets,” said IFC Vice President Finance and Treasurer Nina Shapiro. “IFC expects to follow this bond issue with structured products developed in partnership with local financial institutions.”
“This CFA franc bond provides IFC with a unique opportunity to promote regional integration and support domestic companies that need long-term local currency financing,” said IFC Director for Sub-Saharan Africa Thierry Tanoh. “IFC could not have completed this issue without the strong sponsorship of West African governments that share our commitment for broader and deeper regional capital markets. We are grateful to them.”
Eight countries are part of the West African Economic and Monetary Union (Union économique et monétaire ouest-africaine). The union promotes economic integration among countries that share a common currency, the CFA franc. Its members are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. All the proceeds of the CFA bond will be reinvested in the zone and benefit these economies.
“This issue helps bring financing to underserved sectors such as small businesses and environmental improvement projects, and it provides institutional investors with the opportunity to diversify and improve the risk profile of their investment portfolios,” said Aida Der Hovanessian, IFC’s Dakar-based country manager and co-transaction manager. “This IFC bond is a first step toward achieving greater efficiencies in the local capital markets and introducing the principle of credit differentiation, in line with the efforts of the Conseil Regional, Banque Centrale des Etats de l'Afrique de l'Ouest, and other market participants,” said Skander Oueslati, IFC senior investment officer and co-transaction manager.
IFC funds its lending activities by issuing bonds in the international capital markets. The Corporation’s securities, which are rated Aaa by Moody’s and AAA by S&P, have been issued in 33 different currencies. IFC’s funding program for fiscal year 2007 is around $3 billion.
IFC has been the first, or among the first, nonresidents to issue in many currencies, including Chinese renminbi, Colombian pesos, Greek drachmae, Hong Kong dollars, Malaysian ringgit, Moroccan dirham, and Peruvian soles in the domestic markets; and in Czech koruna, Philippine pesos, and Polish zloty in the eurobond markets.
Between 1990 and 2006, IFC financed 568 investment projects in Africa for a total of $4.5 billion. IFC invests in private businesses across sectors. In Africa its committed portfolio includes mining industries (28 percent), financial institutions (25 percent), infrastructure (16 percent), and manufacturing and services (16 percent).
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services.
