The African Finance Corporation(AFC), has issued its first Sukuk. This Sukuk awarded an A3 senior unsecured rating by Moody’s Investors Service; is the highest rated ever Sukuk issuance from an African institution.

The initial Sukuk target of $100 million, was oversubscribed by 100 percent; resulting in the transaction being increased to $150 million, with a final book order of approximately $230 million.

This Sukuk which is the first in 2017, has a three year tenor and will mature on 24 January 2020.

AFC had previously accepted a $50 million financing in 2015 from Islamic Development Bank(IDB); to finance Islamic compliant projects in African IDB member countries. This Sukuk is its second Islamic finance engagement.

Emirates NBD Capital, MUFG and RMB acted as Joint Bookrunners and Lead managers; with Emirates NBD capital also acting as Sole Global Coordinator.

Commenting on the deal, the President and CEO of AFC, Andrew Alli said, “The core values of Islamic finance, the need to invest ethically in assets that have a tangible positive social impact, made a Sukuk issuance a natural choice for us. We offer global investors the chance to be involved in high-impact infrastructure projects that not only promote social and economic development across Africa but also generate economic returns for our investors.

“This Sukuk represents a milestone in our financing activities, a milestone that will enable us to further diversify our funding sources, to build new relationships with key investors in international markets and help us diversify our portfolio of projects to continue delivering real impact across the continent.”

The Sukuk(Islamic bonds) is not like a conventional bond though there are similarities. The similarities include maturity date, face value and can be bought at a discount or premium . However, with Sukuk the initial investment is not guaranteed. This is because unlike conventional bonds, the Sukuk investor shares ownership in an underlying asset; and is entitled to its share of profit or loss from the project.

Sukuk can only be invested in Sharia compliant assets.