While the securitisation market has been slow to take off in Africa, an increase in deals in the West African Economic and Monetary Union (WAEMU) zone has underscored the potential for further growth. There have been 12 deals since 2014, amounting to XOF 1,065.8 billion (US$1.7 billion), of which six took place in the last two years alone, according to the West African financial regulatory authority, Autorité des Marchés Financiers de l'Union Monétaire Ouest Africaine (AMF-UMOA), formerly the CREPMF.
“That confirms two things – the market has embraced this technique and the fact that the securitisation market has an enormous potential in our zone,” said Karamoko Fadiga, a partner in Asafo & Co.’s Abidjan office and former head of legal at CREPMF.
Building on these recent growth signals, Asafo & Co. is co-producing the inaugural African Securitisation Forum alongside Deloitte. The event will take place on 30 November in Lomé, Togo, and will bring together asset managers, regulators, brokerage firms, development finance institutions, banks and issuers to discuss the development of securitisation as a way of financing economic growth in the WAEMU zone and beyond.
“We wanted to create a new regular event for all securitisation market participants to meet and share their experiences and their issues in order to get more dynamism in the market,” said Nicolas Noblanc, senior counsel in Asafo & Co.’s Paris office and former head of legal at French securitisation management company EuroTitrisation.
One challenge that is potentially restricting faster growth of this sector is the legal framework underpinning the securitisation market in the WAEMU zone. For instance, the range of eligible assets that can be securitised is quite limited, said Fadiga. In addition, WAEMU securitisation deals can only be issued in CFA Francs.
Another challenge that slows potential issuance in the WAEMU zone is that all transactions need to be approved by the regulator. At the same time, the private sector is not as well developed as jurisdictions where securitisation markets are more established, said Noblanc.
To date, Asafo & Co. has advised on most of the region’s securitisation deals, making the firm instrumental to the market’s development. It has worked as legal counsel on Niger’s roughly XOF40 billion (US$63.4 million) deal that securitised the country’s sovereign debt; five transactions in Cote d’Ivoire’s energy sector that were securitised against trade receivables; and property group Teyliom’s securitisation deal that was backed by the company’s real estate assets. The firm also provided legal counsel for Cote d’Ivoire lender NSIA Banque on West Africa’s first securitisation deal backed by commercial loans, as well as the region’s second that was issued by Orabank.
For most of these transactions the firm advised Africa Link Capital in reviewing the legal aspects of the transactions and setting up the special purpose vehicle for issuance on the regional financial market.
In addition, the firm advised an international investor with respect to the COFINA securitisation deal.
While the International Finance Corporation was the anchor investor in the NSIA Banque deal, most of the deals have been sold to local and regional investors such as banks, insurance companies, asset managers and also some retail investors, Fadiga said.
International investors do have an appetite for African securitisation deals, Noblanc added, but they are waiting for more transactions to land, with Fadiga and Noblanc both seeing potential opportunities for securitisation growth in areas such as private sector corporation’s trade receivables, SME loans, infrastructure and agriculture assets.
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