Accessing Local Currency Through Credit-Enhanced Bond Structures in Africa

Abstract

This article describes a private placement and subsequent public listing of local-currency, five-year amortizing notes for a Kenyan wireless telecom operator. For the borrower, local currency financing reduces currency mismatch risk and provides an additional source of liquidity among local banks and institutional investors. Credit-Enhanced Local Currency Bonds (CELC bonds), covered by full or partial guarantees from export credit or multilateral agencies and sold to local investors, are an attractive alternative to local bank financing. Following a successful public issuance, they can broaden the issuer's profile in the local market.