Following the announcement of the collaboration between Bloomberg and the African Development Bank (AfDB) in December, Bloomberg and the AfDB through the African Financial Markets Initiative (AFMI) have launched the AFMI^SM 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.

“The launch of the indices comes as a welcome development at a time when African countries are increasingly looking to domestic capital markets to source much-needed financing for economic development,” said 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. In partnership with Bloomberg, the AFMI will be reviewing the addition of new countries on a biannual basis, i.e. June and December. More markets are expected to be added to the index this year.

“There is a clear need for a transparent and objective benchmark for sovereign debt in Africa. Well-crafted indices are essential in the assessment of value in markets while contributing to liquidity by giving investors a benchmark to evaluate their performance,” said David Tamburelli, Head of Emerging Markets Product, Bloomberg L.P.

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.