By SPECIAL CORRESPONDENT, Rwanda Today
The African Development Bank (AfDB) and
Bloomberg have through the African Financial Markets Initiative,
launched the Afmism Bloomberg African Bond Index, a new family of
African bond indices.
Calculated by Bloomberg Indexes, this composite
index is comprises 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,” said Stefan Nalletamby, the director of the financial
sector development department of the AfDB.
The current index includes an African sovereign
bond index comprising 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.
In partnership with Bloomberg, the AFMI will be
reviewing the addition of new countries on a biannual basis — June and
December. More markets are expected to be added to the index this year.
Sovereign debt
“There is a clear need for a transparent and
objective benchmark for sovereign debt in Africa,” said David
Tamburelli, head of emerging markets product, and Bloomberg L.P.
“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.”
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.
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