L&G launches LSF USD African Government Bond UCITS ETF

Legal & General has launched the L&G LSF African Government Bond (USD) UCITS ETF, with initial co-seeding provided by the UK Foreign, Commonwealth and Development Office through its MOBILIST programme. The fund is listed for European investors and is the first ETF to receive seed capital from the FCDO.

The ETF will seek to replicate the iBoxx LSF USD African Sovereigns Index, launched in 2024. The index covers both investment-grade and sub-investment-grade sovereign bonds and targets US dollar-denominated fixed-rate and zero-coupon bonds issued by eligible African sovereign issuers. It applies explicit country caps and floors along with rules designed to limit concentration risk in the portfolio.

Eligibility for the index and the ETF follows the Liquidity and Sustainability Facility’s framework for secondary market operations. The LSF aims to support secondary market liquidity for African sovereign and corporate issuances, lower borrowing costs and deepen local capital markets by encouraging greater private-sector participation.

MOBILIST’s co-seeding is intended to provide initial scale and help establish trading liquidity at launch. Legal & General noted the ETF complements its existing emerging markets debt offerings by providing a listed instrument tied to the iBoxx index and structured under UCITS rules for institutional and retail investors in Europe.

Lee Collins, head of index fixed income at Legal & General, described the ETF as “the first of its kind available in Europe” and noted the launch expands L&G’s emerging markets debt product range while offering investors a route to increase exposure to the region.

Dr Vera Songwe, founder and chair of the Liquidity and Sustainability Facility, welcomed the launch and noted the ETF reflected growing private-sector interest in African securities. She thanked partners, including Afreximbank, for their support of the LSF’s objectives since inception.

The LSF has cited Afreximbank as an early supporter of the facility’s aims. Legal & General said the fund is positioned to allow European institutional and retail investors to gain targeted exposure to US dollar African sovereign debt while adhering to the LSF’s secondary market eligibility criteria.