Bloomberg and the African Development Bank launch African bond index
The new composite index is set to bring transparency to most liquid African bond markets.The African Development Bank (AfDB) has partnered with Bloomberg to launch the AFMISM Bloomberg® African Bond Index.
Calculated by Bloomberg Indexes, this composite index includes the Bloomberg South Africa, Egypt, Nigeria and Kenya local currency sovereign indices, considered as the four most liquid bonds in Africa. It also includes three sub-indexes for different maturity ranges.
"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, Director of the Financial Sector Development Department at the AfDB.
To be included in the index, which is available to Bloomberg Professional service subscribers, 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," said David Tamburelli, Head of Emerging Markets Product, Bloomberg L.P.
Last year, African equity markets recorded their highest level of activity in five years. A new report issued by PwC, “IPO Watch Africa 2014”, revealed that the total amount of capital raised on African equity markets reached $11 billion last year (€9.7 billion), almost equal to the $11.1 raised in 2012 and 2013.