Ecobank’s debt listing on the London Stock Exchange on 24 June provoked a lot of reactions. The symbolism was strong: the UK bourse invited Ecobank Transnational Incorporated (ETI), the banking group’s holding company, to open the session on the main market and mark the successful issuing of $350m worth of “sustainability” bonds. This transaction represents the first time that a sub-Saharan financial institution released subordinated eurobonds that comply with sustainable-development standards. Ecobank justifies the high rate of its latest issue by saying that it is due to the type of financing scheme. Tier 2 capital, this debt is subordinated, in addition to being a sustainable issue. Pricing is based on many factors including ratings, credit outlook, investor feedback and appetite.
ETI recorded 4% growth in its turnover of $1.7bn in 2020, despite the difficulties linked to the Covid-19 crisis. But in this context, its pre-tax earnings fell sharply (-57%) to $174m, due to provisions for the depreciation of its asset portfolio and various costs, notably legal ones. The sustainable nature of this issuance will help Ecobank diversify its investor base. This is because the pool of environmental, social and governance-focused investors that would typically invest in such sustainable-bond issuances would differ to some extent (although partly overlap) from the pool of global emerging-market investors that would typically invest in regular bond issuances from banks based in frontier or emerging markets.