African governments have historically faced high costs of borrowing, which inevitably impacts their ability to finance green projects and to play an active role in the global energy transition. Improved access to Eurobond markets has the potential to save these countries an estimated US$11 billion in borrowing costs over the next five years. With better terms for new issuances of Sustainable Development Goals (SDG) or climate-linked bonds, sovereigns across the continent could see a dramatic increase in the volume of green and blue bond financing.

White & Case provided pro bono advice to The Liquidity and Sustainability Facility (LSF), an organization originally inspired by the United Nations Economic Commission for Africa, in collaboration with Afreximbank. The LSF's dual objectives are to support the liquidity of African sovereign Eurobonds and incentivize SDG-related investments such as SDG and green bonds on the continent.

The LSF's market participation with African governments and private investors aims to improve African sovereign debt sustainability and enhance liquidity in the market in line with international standards.

We advised on the LSF's inaugural US$100 million repurchase transaction with Afreximbank and Citi, which was announced at the 27th session of the United Nations Climate Change Conference (COP27). This transaction enables liquidity in a diversified portfolio of African sovereign Eurobonds, which includes the Arab Republic of Egypt, Kenya and Angola as issuers and relies on an innovative tri-party platform designed for the LSF by BNY Mellon.

Ingrid York, partner in our London office, led the White & Case team of more than 40 lawyers in nine offices. They advised on multiple aspects of the deal including structured finance, financial services regulations, tax, corporate, employment, technology, intellectual property and data. "For the LSF, an innovative and scalable legal program has been established," says York. "The platform will help African sovereigns access international markets efficiently and for the long term."

The LSF is in the process of signing on clients to the platform including potentially two of the largest American and European fixed-income private investors. This first transaction marks the full operationalization of the LSF's business model.

Currently, the share of sustainability-linked bonds issued in Africa and the Middle East accounts for less than 1 percent of the global total amount. The LSF aims to address the gap in market participation for financing Africa's international sovereign debt, indirectly helping to promote a more stable repo market on the continent.

Photo by Justin Jin © Bespoke
Women grow organic vegetables in an oasis in the Sahara desert using solar energy.