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  3. UN agency launches African repo facility
Repo news

UN agency launches African repo facility


05 November 2021 Africa
Reporter: Bob Currie

Generic business image for news article
Image: AdobeStock/pomogayev
The United Nations Economic Commission for Africa (UNECA) has launched a short-term financing facility for African bonds.

The recently announced Liquidity and Sustainability Facility (LSF) will allow counterparties to use African fixed income securities in repo transactions, says a UNECA statement designed to align with the Glasgow COP26 climate-change summit.

This facility aims to improve sovereign access to international bond markets and to reduce liquidity premiums, potentially delivering savings of up to US$11 billion in borrowing costs for African governments over the coming five years.

The LSF repo service is now live, according to UNECA, and will potentially grow to a US$30 billion marketplace in the initial years of its operation. Several international asset managers have registered interest in participating in financing transactions via this facility.

The first transaction through this repo facility, a US$200 million trade funded by Afreximbank, is expected to close in Q1 2022.

Building on this model transaction, the LSF will potentially raise US$3 billion in 鈥渙n lending鈥 from developed countries following a special drawing rights (SDRs) package issued by the International Monetary Fund in August 2021. This US$650 billion SDR package forms part of emergency assistance from multilateral organisations designed to assist the ability of African countries to withstand and recover from the pandemic.

This short-term financing facility has grown from consultation undertaken by UNECA with African member countries designed to support their post-COVID recovery and their ability to build for future development.
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