The Liquidity and Sustainability Facility (LSF) announced its launched a standardized Africa General Collateral Triparty repo basket in partnership with financial institutions BNY, Clearstream, Euroclear and J.P. Morgan. The basket features nearly 180 African sovereign and corporate international bonds and is designed to centralize liquidity in the interbank bond market.
This initiative enables investors to execute bespoke triparty repo transactions on this basket within a high-quality, liquid environment. The objective of this standardized basket is to bring to African capital markets the benefits of such proven infrastructure in terms of securities pricing accuracy, enhanced risk management capabilities, increased market transparency, reduced price volatility, and strengthened collateral eligibility for securities.
These features support the market conditions conducive to gradual interest rate reduction, which is the strategic goal of the LSF. The standardized list of eligible African Eurobonds, uniformly adopted across the four leading global triparty agents, enables interoperability between platforms — a breakthrough innovation that positions African Eurobond repo trading at the cutting edge of operational efficiency.
David Escoffier, CEO of the LSF Secretariat, said in a statement: “Through this world-first coordinated approach, we’re creating the conditions for concentrated, efficient liquidity in this asset class and building a vibrant interbank market for African repos.”
Benedict Oramah, president and chair of the Board of Directors of the African Export–Import Bank (Afreximbank) and Board Member of the LSF, said in a statement: “As an early supporter of the Facility, which has become an integral part of our development ecosystem, we take great satisfaction in witnessing its steady progress toward fulfilling its transformative mission. We fully support the LSF’s objective to create a new financing paradigm for Africa—one that catalyzes economic growth, drives sustained development, and attracts diversified investment from the global financial community at large.”
“As the world’s largest collateral platform provider, we are pleased to continue our support of the LSF to develop solutions which facilitate financing in Africa’s capital markets,” said Gesa Johannsen, executive platform owner in the Global Collateral division at BNY, in a statement. “With this basket, market participants can leverage BNY’s Global Collateral platform to deploy a more seamless schedule to meet their financing needs, streamlining operations, optimizing liquidity and ultimately encouraging new investors to the region’s sovereign debt markets.”
“A standardized basket enhances the efficiency of repo trading in African Sovereign Eurobonds,” said Marton Szigeti, head of Collateral, Lending & Liquidity Solutions at Clearstream, in a statement. “We are very pleased to be part of this innovative initiative that both modernizes and strengthens African capital markets and improves risk and collateral management for investors.”
Bernard Ferran, chief commercial officer at Euroclear, said in a statement: “As a financial market infrastructure, our role is to bring these technologies to the forefront through our global network and help deliver capital market efficiencies and growth.”
Vera Songwe, founder and chair of the LSF, said in a statement: “We’re building the backbone for thriving African capital markets, allowing for more instruments to be traded in that space. This breakthrough will mobilize private capital for Africa’s sustainable future, backed by the world’s most respected financial institutions.”