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Pan African Local Currency Government Debt- African Domestic Bond Fund (ADBF)

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Monday, March 19, 2018 /6:50 PM / NSE, AFDB 

MCB Investment Management
 
MCB Group is a leading integrated banking and financial services institution in Mauritius and an increasingly prominent player in Africa. Our rich history, commitment to our clients and innovative culture underpin our solid franchise and track record of sustained profitability.

Key facts and figures (as at December 2017)

·  Group total assets: MUR 369.5 bn (USD 10.9 bn)

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Shareholders’ equity: MUR 48.6 bn (USD 1.4 bn)

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Market capitalization: MUR 65.1 bn (USD 1.9 bn)

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Amongst the Top 3 performers of the SEM Sustainability Index

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Rated Baa3 (Moody’s)

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Leading institutional asset manager in Mauritius established in 1998

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Team of investment professionals, risk management and back office support functions based in Mauritius

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Diversified product offering marketed under the MCB brand

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Assets under management spanning multiple asset classes and strategies

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Provides actively managed tailor-made portfolios, investment solutions and advisory services to institutions

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Increasingly recognized on the continent for its Africa focused strategies

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Regulated by the FSC (regulatory body of Mauritius)

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The MCB Africa Bond Fund(“ABF”) was launched in February 2014 and has the longest track record in the market

·      ABF, a US $ denominated fund, invests in local and hardcurrency African government and highly rated corporate bonds

·     The fund is actively managed by the MCBIM Fixed Income team against a benchmark of 13 equally weighted African fixed income markets.

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ABF is targeted primarily towards institutional investors and fits attractively into adiversified portfolio

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Over the past 4years, MCBIM has developed the operational infrastructure and fund management expertise to manage the MCB Africa Bond Fund efficiently

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The Fund has consistently out performed its benchmarks inceinception and has delivered attractive returns

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The Case for Africa Local Currency Fixed Income
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AfDB/AFMI℠ Bloomberg® African Bond Index 25% Capped Index
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Fund objective

The African Domestic Bond Fund (“ADBF”) is an exchange traded fund (“ETF”) that will aim to track the performance of the AfDB/AFMI℠ Bloomberg® African Bond Index(“ABABI”) 25% Capped, before fees and expenses. The Manager will seek to achieve this investment objective by employing a stratified sampling approach to match the Index's characteristics and returns through investing in a well-diversified portfolio that represents the Index. The proposed ADBF will largely mirror the performance of ABABI, as at least 80% of its total assets under management will be invested in the Index. 

About the Index
ADBF will be benchmarked to the ABABI 25% Capped Index which is constructed and published by Bloomberg LP. The Index is a rules-based market value weighted composite index comprising local currency sovereign debt from South Africa, Egypt, Nigeria, Kenya, Namibia, Botswana, Ghana and Zambia. Country percentage contribution to the index is capped at 25%. It is expected that other African sovereign countries will be added over time to the Index.

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The African Development Bank, through its African Financial Markets Initiative (AFMI), is pleased to sponsor and be an anchor investor [USD 25 million] in the ADBF, the first Enhanced multijurisdictional fixed income ETF on the continent. With an aim to track the performance of the ABABI, the ADBF will help provide an important source of funding for local African governments, improve liquidity in local markets and create benchmarks for investors.
 

The AfDB’s investment is in line with their long-standing commitment to the growth of African domestic capital markets and further enhances the various financing and non-financing activities we have undertaken to provide better market access for governments and corporates.
 

The AFMI was designed in 2008 to specifically target the development of African domestic debt markets by strengthening market infrastructure and investing in local currency denominated debt. Through this ongoing initiative, AfDB continues to pursue the following goals:
 

  • Encourage the creation and adoption of African bond indices;
  • Improve liquidity in African local capital markets;
  • Contribute to the improvement of operational aspects of African bond markets (e.g. settlement systems, data collection and dissemination through its platform www.africabondmarkets.org etc.);
  • Increase the pool of sophisticated African fund managers, contributing to skills transfer into Africa;
  • Establish new financial products on the African continent. 

As Africa's premier development institution, the AfDB will continue supporting strong financial systems in Africa given the important role they play in the continents economic and social progress. 

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