Repo business model

Why repo markets matter

A well functioning repo market supports liquidity and price discovery in the cash market, thus helping to improve the cost of funding for firms and governments and the efficient allocation of capital.”

BIS, 2017.

With our wealth of experience in the field, we are well placed to support a financial infrastructure solution for African Sovereign Eurobond debt. A more robust and liquid repo market should lead to more demand from buyers, more refinancing and lower costs of servicing that debt.

Brian Ruane, CEO of Clearance & Collateral Management, BNY Mellon.

“As a global asset manager, Amundi is proud to support the LSF. This mechanism will foster the emergence and the structuring of the African sovereign debt market, on par with the best international standards. It represents an important milestone for investors, as the African continent offers promising opportunities in terms of sustainable fixed income investment, in particular green bonds.

Vincent Mortier, CIO, Amundi

Developed countries have long enjoyed the existence of large “repo” markets for their government bonds, facilitating the creation of stable additional funding sources for their public finances.

The LSF objective is to kickstart the same dynamic for African sovereign bonds by providing investors with competitive funding through repurchase agreements (“repo”).

The LSF’s mission is to reduce the cost of borrowing by African Sovereigns, increase the pool of private capital willing to invest in Africa and mobilize affordable resources for green investments.

A repo facility dedicated to African Eurobonds, specifically designed to operate at the highest standards of global markets

Graphic repo facility dedicated to African Eurobonds specifically designed to operate at the highest standards of global markets

LSF Eligible Collateral

Key References

 

Collegial, LSF
LSF, November 2022
Repo Literature Review, Bibliography & FAQ
Brian A Ruane, BNY Mellon
BNY Mellon, 19th May 2022
Why repos are Africa’s next frontier
What Repos Can Do for Africa’s Debt Problem
Jerome M. Schneider, Pimco
Jerry Woytash, Pimco
Pimco, 5th August 2021
Fed’s New Repo Facility Should Ease Future Stress, With Caveats
Hippolyte Fofack, Afreximbank
Brookings, October 2021
The ruinous price for Africa of pernicious ‘perception premiums’ – October 2021
Reuters, 28th July 2021
Fed establishes standing repo facilities to support money markets
Wolf Street
My Thoughts on the Fed’s Back-to-the-Future “Standing Repo Facilities” Announced Today
Mark Plant, CGD
David Escoffier, Eighteen East Capital
Center For Global Development, 12th July, 2021
The Case for Liquidity Support for Frontier Markets
Sir Jon Cunliffe, Bank of England
William C Dudley, President Federal Reserve Bank of New York
BIS, CGFS Papers No 59, April 2017
Committee on the Global Financial System: Repo market functioning
Michael Olabisi, Graziado Business School, Howard Stern, University of Michigan
Journal of African Trade, Vol.2 Issue 1-2, December 2015
Sovereign bond issues: Do African countries pay more to borrow?
Jens Hilscher, Brandeis University
Yves Nosbusch, London School of Economics
Review of Finance, Vol.14 Issue 2, April 2010
Determinants of Sovereign Risk: Macroeconomic Fundamentals and the Pricing of Sovereign Debt

David Lesmond, Tulane University – A.B. Freeman School of Business
John Hund, University of Georgia
Paper, 17th March 2008
Liquidity and Credit Risk in Emerging Debt Markets

About The Liquidity and Sustainability Facility 
The LSF was designed with the support of the United Nations Economic Commission for Africa and Afreximbank with the dual objective of supporting the liquidity of African Sovereigns Eurobonds and incentivizing SDG-related investments such as SDG and green bonds on the African continent.


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