Beijing’s push to internationalise the yuan is gaining a new vehicle in Africa as another major multilateral lender is set to diversify towards the Chinese currency to slash borrowing costs and reduce the risks of dollar volatility.
Multilateral lender Africa Finance Corporation (AFC) has confirmed that a debut panda bond issuance is “on the table for this year”, as it looks to deepen its ties with Chinese capital markets following last year’s successful triple-A Chinese rating.
Banji Fehintola, the executive director for financial services at the AFC, said that entering Chinese capital markets was a “natural evolution” of a strategy built on an established track record with major Chinese lenders, such as China Exim Bank, the Industrial and Commercial Bank of China (ICBC) and Bank of China.
“Yes, it is on the table for this year. It is one of the things we are considering; we began looking at it last year, and it remains on the table this year as well,” he told the South China Morning Post last week.
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How China is reshaping its economic ties with Africa
How China is reshaping its economic ties with Africa
Fehintola said that while the precise timeline had not been set, investor roadshows were complete and a mandate was in place to act “at short notice” once market conditions were right. He said the issuance remained “an important part of our funding plan”.