The African Development Bank (AfDB) through the African Financial Markets Initiative (AFMI) has launched its AFMISM Bloomberg® African Bond Index. Calculated by Bloomberg Indexes, this composite index is comprised of the Bloomberg South Africa, Egypt, Nigeria and Kenya local currency sovereign indices.
“The launch of the indices comes as a welcome development at a time when African countries are increasingly looking to domestic capital markets to source much needed financing for economic development,” says Stefan Nalletamby, the Director of the Financial Sector Development Department of the AfDB.
The current index includes an African sovereign bond index comprised of the four most liquid bonds in Africa and three sub-indexes for different maturity ranges. To be included in the index, a security must have at least one year remaining to maturity and withstand price stability tests. Further liquid markets are expected to be added to the index this year.
“There is a clear need for a transparent and objective benchmark for sovereign debt in Africa. Well-crafted indices are essential in the assessment of value in markets while contributing to liquidity by giving investors a benchmark to evaluate their performance,” says David Tamburelli, Head of Emerging Markets Product, Bloomberg L.P.
The AFMI works to deepen the continent’s local currency bond markets and also strives to create an environment where African countries can access financing at variable terms. By providing transparent and credible benchmark indices, the AFMISM Bloomberg® African Bond Index provides investors with a tool with which to measure and track the performance of Africa’s bond markets.