MCB has successfully closed a USD147m Basel III Tier 2 bond issuance with the African Development Bank (AfDB). The funds will help finance the MCB’s sustainable development agenda in the Sub-Saharan and Indian Ocean regions.
MCB has had a long-term relationship with AfDB that has lasted over 20 years, during which two lines of credit (2002 and 2013) were successfully repaid. The Bank also received a subordinated loan in 2013, which will be repaid in full by August 2023. The Basel III 10-year Tier 2 Bond builds on this history.
JP Morgan, a global financial services firm, and SMBC Nikko Capital Markets Limited, a leading Japanese investment banking firm, jointly acted as Placement Agents in a recent equity financing transaction.
The financing is expected to catalyze additional deposits to expand MCB’s loan book, benefiting several Mauritian and African corporates, as well as SMEs. It is expected that the support will generate thousands of jobs in Africa over the next 5 years, thereby enhancing the lives of numerous African families.
Under Basel III, banks are required to keep certain leverage ratios and maintain certain levels of reserve capital to mitigate risk in the international banking sector. A bank’s tier 1 and tier 2 assets must be at least 10.5% of its risk-weighted assets. For the semester to 31 December 2022, the MCB had a capital adequacy ratio of 18.6%, of which 17.2% was in the form of Tier 1.
Alain Law Min, Chief Executive Officer (CEO), MCB Ltd: “This first Basel III Tier 2 bond issuance is a landmark transaction for MCB. The collaboration between MCB and AfDB has spanned several decades and we are thankful to AfDB for their continued support and for their trust and confidence in our organization to deliver on our strategies. This capital and funding instrument will finance high-impact projects in the Sub-Saharan and Indian Ocean regions as MCB pursues its sustainable development agenda. Our strategy is also aligned with that of AfDB, which takes a long-term view on the socio-economic development of Mauritius and the region. Finally, the success of this placement reflects the international recognition of the Bank’s strong fundamentals, its investment grade ratings, and investor confidence in MCB’s growth potential.’’
MCB: A truly pan-African financial institution
Leila Mokaddem, African Development Bank Director General for Southern Africa said “This support underscores our long-standing relationship with MCB, which dates back to 2002. We are proud to be associated with a key banking partner in Mauritius; its ambition to play a key part in Africa’s development resonates very well with our development agenda.”
Ahmed Attout, African Development Bank Acting Financial Sector Director, said the Bank was pleased to expand its relationship with MCB, which he described as a truly pan-African financial institution. The Bank is supporting the introduction of a novel capital markets instrument in Mauritius and contributing to broadening the country’s capital markets. “The investment objectives under this facility align with our priority development programs in Africa, including industrialization, renewable energy development, and promoting SME growth.”
AfDB is a regional multilateral development finance institution headquartered in Abidjan, Ivory Coast. Founded in 1964, the overarching objective of the AfDB Group is to spur sustainable economic development and social progress in its regional member countries, thus contributing to poverty reduction. This instrument is the first Basel III bond issuance in the debt capital market by a Mauritian bank to date.