SEM lists first Pan-African Sovereign Bond ETF

By: The WFE Focus Team Nov 2018

On 18 September 2018, the Stock Exchange of Mauritius (SEM) listed the first Pan-African Sovereign Bond Exchange Traded Fund (ETF) - the African Domestic Bond Fund (ADBF).

ADBF, which is managed by MCB Investment Management Co. Ltd, is a USD-denominated ETF, structured as an open-ended Collective Investment Scheme that seeks to replicate the AfDB/AFMISM Bloomberg African Bond Index 25% Capped, an index launched in December 2014 by the African Development Bank (AfBD). The ETF invests in African currency denominated debt obligations issued or guaranteed by an African Government, and initially comprises debt obligations from South Africa, Egypt, Nigeria, Kenya, Namibia, Botswana, Ghana and Zambia. ADBF is the result of a partnership between the AfDB, which committed a total investment of USD 25 million to the fund, and MCB Investment Management Co. Ltd, a subsidiary of MCB Capital Markets, with the aim of promoting the development of local financial markets throughout the African continent.

ADBF constitutes a new product offering which provides investors with a broad exposure to African sovereign debt securities. The listing of ADBF constitutes an important milestone in the positioning process of SEM as an attractive multi-asset class international exchange, which is today recognised as a compelling platform for the listing and trading of a growing variety of products from African issuers. This listing is also in line with SEM's internationalisation strategy and its multi-asset class focus.

The launch of ADBF also shows the African Development Bank's commitment to supporting innovative solutions that will render capital markets more attractive to both African domestic and international investors. This fund is part of the Bank's effort to help catalyse and mobilise African domestic resources through domestic capital markets in order to further strengthen Africa's financial sustainability.