African Lender Mulls U.S. Bond Sale to Fund Trade Financing

DAR ES SALAAM (Capital Markets in Africa) – Trade & Development Bank, a trade financier with operations in 21 African countries, will hold an investor roadshow in the U.S. next year to prepare for a possible Eurobond sale, Chief Executive Officer Admassu Tadesse said.

TDB completed a promotional campaign in Gulf states last month, where it’s in the process of finalizing $200 million of funding, Tadesse said in an interview Thursday at his office in the capital, Nairobi. It’s now planning to enter the U.S. market for the first time, after President Donald Trump last month removed sanctions on Sudan, one of the bank’s shareholders.

“This will be our first deal in U.S.,” Tadesse said in an interview Nov. 9 at his office in the capital, Nairobi.

Africa’s total merchandise trade grew 4.9 percent to $1.08 trillion last year, according to the African Export-Import Bank. The value of bank-intermediated trade finance in Africa is $362 billion, according to a June African Development Bank report that estimated the annual gap in trade financing at $91 billion. TDB relies on income from trade-finance loans and facilities for 68 percent of its earnings, which grew 7.1 percent to $101.5 million last year.

The bank, which is based in the Burundian capital of Bujumbura, in March, raised $500 million in a Eurobond sale that was four-times oversubscribed. It went back to the markets in April and raised a further $200 million through the sale of a medium-term note. TDB is rated Baa3 by Moody’s Investors Service, and BB by Fitch Ratings.

‘Good Rates’
“We can attract funding at good rates,” Tadesse said. “We also enjoy preferred-creditor status so we always get our payments, even in countries with foreign-currency restrictions where repatriating dollars is a challenge.”

TDB won’t renew some of its euro-denominated facilities in Sudan as a strategy to reduce its exposure to the North African country, which stood at $728 million, or a fifth of the bank’s loan book, in 2016.

The bank has faced “occasionally delayed payments” from Sudan on its revolving credit facility because of logistical challenges at Port Sudan, which have hampered exports of cash crops, and foreign currency shortages, he said. Sudan’s loan repayments are made from oil exports along shipments of commodities including sorghum, cotton, sesame and gum Arabic.

TDB’s institutional shareholder includes the People’s Bank of China, Belarusian state-owned Paritetbank, the African Development Bank and the National Pension Fund of Mauritius.

Source: Bloomberg Business News