The African Development Bank (AfDB) has appointed MCB Investment Management (MCBIM), a subsidiary of MCB Capital Markets, as fund manager for its first multi-jurisdictional Fixed Income Exchange Traded Fund (ETF) in Africa.
Stefan Nalletamby, the AfDB’s Director for Financial Sector Development, commented: “In developing markets, it is particularly important for the lead institutions to act to reduce financial market impediments and instil local and international investor confidence”.
“AfDB is leading the establishment of the African Domestic Bond Fund (ADBF) as a sovereign fixed income ETF investing in different countries which will be the first time an institution of this kind is established in Africa.
“AfDB is the premier development Bank for Africa and the Bank’s leadership in the establishment of ADBF is demonstrable of the Bank providing a local solution to several structural weaknesses,” the Director added.
Commenting, Rony Lam, Chief Executive Officer of MCB Capital Markets, said, “We are privileged to have been selected by the AfDB as Fund Manager for this ground-breaking fund”.
“The ADBF will pave the way for the development of local bond markets in Africa and we are proud to be associated with this important initiative.
“This demonstrates MCBIM’s fund management capabilities and confirms our position as one of the leading Africa fixed income specialist firms,” the CEO said.
The ADBF, which will be managed by MCBIM’s Fixed Income team, led by Abhimanyu Yadav, AfDB said through this initiative it aims to strengthen African economies by reducing dependency on foreign currency denominated debt, adding that it also aims to increase the range of available financing options and act as a catalyst for regional market integration.
AfDB said the primary objective of the African Domestic Bond ETF (ADBF) is to encourage bond issuance in local currencies by facilitating access to local fixed income markets for investors.
The Board of Directors of the AfDB also approved a seed equity capital investment of USD 25 million for the ADBF.
The ETF will be invested in both government and corporate bonds, and will initially be listed on the Stock Exchange of Mauritius according to information made available by AfDB.