The African Export-Import Bank (Afreximbank) is considering raising $1 billion through a syndicated loan that could include an offshore Chinese yuan component, marking its potential entry into the offshore renminbi financing market.
The proposed three-year facility will comprise US dollar and offshore yuan tranches, with the allocation between the two currencies to be determined by investor demand during the syndication process, according to people familiar with the transaction.
Bloomberg reported on Friday that Bank of China and Standard Chartered Bank have been appointed global coordinators for the proposed financing.
If concluded, the transaction would represent Afreximbank’s first foray into the offshore renminbi market, reflecting growing financial and trade relations between China and African economies.
The move comes as African countries and financial institutions increasingly explore alternative funding currencies and deepen economic ties with China, one of the continent’s largest trading partners.
Using the yuan for part of its borrowing could provide Afreximbank with an additional source of funding while supporting trade and financial transactions between African businesses and Chinese counterparts.
The proposed facility also highlights the growing internationalisation of China’s currency as Beijing seeks to expand the yuan’s role in global trade, investment and financial markets.
For African economies, greater access to yuan financing could offer opportunities to diversify funding sources and potentially reduce exposure to fluctuations in the US dollar.
However, the extent of the benefits will depend on borrowing costs, currency movements and the availability of yuan-denominated financing for trade and investment activities.
The proposed loan comes amid broader efforts by China to strengthen the international use of its currency, while African governments and financial institutions seek to diversify their funding arrangements.
The final size of the yuan component will depend on demand from participating lenders and investors during the syndication.
