The African Development Bank (AfDB) through the African Financial Markets Initiative (AFMI) and Bloomberg have launched the AfDB's AFMISM Bloomberg® African Bond Index (ABABI), a new family of African bond indices. Calculated by Bloomberg Indexes, this composite index is comprised of the Bloomberg South Africa, Egypt, Nigeria and Kenya local currency sovereign indices.
"This collaboration comes at a time when African countries are increasingly looking to domestic capital markets to source financing for economic development," says Stefan Nalletamby, the Director of the Financial Sector Development Department of the AfDB.
The current index includes an African sovereign bond index comprised of 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. Further liquid markets are expected to be added to the index this year.
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. By providing transparent and credible benchmark indices, the AFMI through its work with AfDB and Bloomberg will provide investors with a tool with which to measure and track the performance of Africa's bond markets.
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