The Co-Financing, Syndications and Client Solutions department of the African Development Bank Group has met with London-based insurers to galvanize continued support of the Bank’s balance sheet optimization and mobilization ambitions, in line with its 2023 lending program.
The Bank held an investor relationship event on 28 February, attended by representatives from over 30 insurance companies from the London, Bermudan and other international markets, including many Lloyd’s Syndicates. The meeting took place in London on the margins of the upcoming ExCred International conference
The Texel Group, one of the Bank Group’s major brokers, hosted the event, continuing its support of multilateral development banks’ sustainable development finance goals.
The interactive session was an opportunity for the insurance market practitioners to learn more about the Bank Group and its mobilisation plans for 2023 and beyond. In a presentation, Max Ndiaye, Acting Director of the Co-Financing, Syndications and Client Solutions department, highlighted the evolution of the Bank’s risk transfer activities and the importance of the preferred creditor status in the asset quality of the Bank’s sovereign loan book. He also spoke on the origination and approval process of new transactions.
The Bank reinforced the benefits of its preferred credit status with respect to pricing and elaborated on the lack of sovereign defaults on the Bank’s loans or credit enhanced facilities.
Simon Bessant, Global Head of Insurance at The Texel Group said: “It is important for the African Development Bank to deepen its relationship with institutional investors by explaining their origination processes and excellent risk management framework to crowd them in to projects they may normally not be able to accommodate at a pricing that is palatable to AfDB borrowers.”
“This year is particularly exciting because we are increasingly exploring multi-instrument approaches with insurers through syndication and guarantees in support of sovereign borrowings in line with their newly adopted ESG Frameworks”, said Nana Spio-Garbrah, Acting Manager of the Client Solutions Division.
The G20 Capital Adequacy Framework Report notes that increased private capital mobilization is critical to achieving the UN Sustainable Development Goals and Agenda 2063. The report’s recommendations include scaling up the transfer of risks embedded in multilateral development bank loan portfolios to private sector counterparties. Therefore, the Bank is continuing its engagement with asset managers and institutional investors to innovate new risk sharing structures.
The African Development Bank has already concluded many balance sheet optimisation and risk sharing structures with pools of private capital and/or unfunded credit protection providers, but it recognises that regular dialogue will help strengthen its partnerships in this area. Examples of transactions following the success of the Bank’s innovative “Room to Run” (R2R) initiative, include the conclusion of Room 2 Run Sovereign in October 2022, featuring participation from Axa, Axis and HDI Specialty.
The door has since been widened to mobilize more institutional investors to maximize the benefits of the Bank’s landmark GCI-7 capitalization, and further leverage the Bank’s capital.