New ETF Targets African Sovereign Bonds with Up to $250 Million Backing

A new exchange-traded fund that tracks an African sovereign bond index has been introduced, with up to $250 million in pledged support. Managed by Legal & General, the ETF mirrors an index designed by S&P Dow Jones Indices in partnership with the Liquidity and Sustainability Facility, which is backed by Afreximbank. By bundling African dollar-denominated government bonds, the fund gives institutional investors a single-ticket way to gain diversified exposure.

Vera Songwe, the LSF’s founder and former head of the UN Economic Commission for Africa, explained that a deeper secondary market could shrink the risk premium and ultimately lower borrowing costs for African states. She noted that the market must grow to about $1 billion to reach the scale needed for robust trading. Seed capital for the initiative is being supplied by the UK Foreign, Commonwealth & Development Office.