Legal & General launches LSF-backed African Government Bond ETF

Legal & General Asset Management has launched the L&G LSF African Government Bond (USD) UCITS ETF. The fund was co-seeded by the UK Foreign, Commonwealth and Development Office through its MOBILIST programme and will track the iBoxx LSF USD African Sovereigns Index introduced in 2024.

The ETF provides public-market exposure to USD-denominated fixed-rate and zero-coupon bonds issued by African sovereigns. The index includes both investment-grade and sub-investment-grade issues and the product applies explicit country caps and floors and eligibility rules intended to limit issuer concentration. The fund is structured as a UCITS vehicle, making it available to investors across Europe.

MOBILIST provided initial capital to support the fund at launch with the aim of establishing credible scale and early liquidity. The Liquidity and Sustainability Facility designed the index and defines which countries qualify under its framework for secondary market operations. The LSF’s stated objective is to support liquidity in African sovereign and corporate bond markets and to connect issuers with a wider investor base.

Lee Collins, Head of Index Fixed Income at Legal & General, described the ETF as the first of its kind available in Europe, saying the product expands the firm’s emerging markets debt offerings and gives investors a way to increase regional exposure that can be underrepresented in global portfolios. Dr Vera Songwe, founder and chair of the LSF, called the launch evidence of rising private-sector interest in African securities and acknowledged Afreximbank for long-standing support of the facility’s goals.

The ETF offers an exchange-traded route for institutional and retail investors to gain exposure to African sovereign bonds without purchasing individual bonds in secondary markets. Because the index mixes higher-rated and lower-rated sovereign debt, the fund will include a range of credit qualities and the issuer limits are intended to manage concentration risk.

Partners point to the combination of a recognised index, a listed investment vehicle and institutional funding as a way to broaden participation in African sovereign bond markets and to help establish tradable scale for those securities in public markets.