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AfDB lists Shs 12.5billion bond on USE

By Joan Akello

The officer in charge of the African Development Bank (AfDB), Jason Mosomi Mochache says the 2 year local currency bond that attracts 25 percent yield will finance infrastructure and develop African capital markets. It is noted that foreign currency denominated liabilities have frequently financed local currency activities while the stock of foreign currency denominated assets has been limited.

“The Uganda issuance is part of AfDB’s plan to launch more local currency bonds across the continent with proceeds used to provide local currency bonds to the bank’s clients….particularly to mitigating foreign exchange risk posed by hard currency loans,” Mochache said.


The foreign exchange risk can be traced through insolvencies, financial crisis and fall in economic output that may result in large and unexpected depreciation of the domestic currency. The AAA rated bank says it is ready to lend any Ugandan who requests however for financing in the foreign currency.

Under the local currency initiative , AfDB wants  to diversify  its local currency  portfolio  across African  regions beyond  the South African Rand  which is the multilateral lender’s  third largest  lending currency. In the past, multilateral development banks AfDB inclusive offered loans in foreign currency.

The benefits of local currency  bonds include setting new  benchmarks, stretching the yield  curve,  introducing  innovations and providing  significant diversification  opportunities for local  institutional  investors  such as insurance  companies and pension funds. Mochache says the local currency bond will enable people to borrow and refund.

This second issuance  under the bank’s  Medium Term  Note(MTN)  programme established in  2012 , for an amount of Shs  12.5 billion  Mochache says  was offered as a tap  sale on the original  note issued in July 2012 and was opened  for subscription  until May 27. The bank reported that the second tranche just like the first issuance (Shs 12.5) was oversubscribed reaching approximately Shs 19.5 billion. This was   Shs 1.5 Billion higher than the Shs 18 billion subscription in the first tranche.

Angela Kanyima , director legal department in Capital Markets Authority – representing the CEO said the issuance is  “a sign that the market  is growing” while Kenneth Kuitariko, CEO African Alliance Uganda (AfDB’s transaction advisor ) said the governing body is looking forward to the next tranche.

Mochache says the next tranche is dependent on the need and demand.

Joseph Kitamirike, the USE chief executive officer  also told the press after the listing that  the an  automated  trading system  will be in force  probably at the end of the  third quarter.

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