MCB launches MUR560m callable structured bond in Mauritius

ENL Commercial is seeking to raise MUR560m (US$16m) with a structured bond that will be listed on the Stock Exchange of Mauritius (SEM) on March 30, 2017. The secured floating-rate note will be issued by Commercial Investment Property Fund (CIPF), a wholly-owned subsidiary, and distributed by MCB Capital Markets, which has the right to redeem the notes any time after the fifth year at a price equal to the nominal amount through a callable feature. If such event does not occur, the redemption at maturity will be the aggregate nominal amount. The will not be subject to reissuance if they have been redeemed.

This is the first bond in Mauritius that has been rated by Care Ratings (Africa), which is the first licensed credit rating agency in Mauritius recognised by the Bank of Mauritius as an external credit assessment institution, according to Ori. "The rating and the bond's innovative structure meant it was attractive to banks (due to the capital relief provisions under Basel II/III), insurance companies (the duration) and institutional fund managers (for the quality of the issuer)," said Vimal Ori, chief operating officer at MCB. "Broadly speaking, this bond fits with our objective of developing the local currency African debt capital markets."

The investment market in Mauritius is expected to continue developing and new regulatory guidelines are expected, with the introduction of new nomenclatures and associations marks of an improvement in the understanding of structured products in the country, according to the Africa & Mauritius Structured Products Association.

The CIPF is a property fund created in 2016, which houses and leases back the immovable assets of ENL's subsidiaries. "Its assets are mostly offices and warehouses, which are usually leased to high quality tenants. Investors could select their level of exposure by senior and junior tranches," said Ori. MCB is an active issuer of debt in, raising more than MUR10bn of the MUR13bn corporate debt issued over the last two years, including, in November 2016, MUR5bn for Sun Limited under a multi-currency medium-term note programme, the largest single bond trade in Mauritius, according to Ori.

MCB Capital Markets issued six structured products in 2016 based on smart beta and ethical indices, such as the Solactive European Quality, the Finvex Sustainable & Efficient Europe 30 and the Commerzbank Global Security 9% RC ER USD indices, according to SRP data. All products featured uncapped call payoff profiles, with two structured alongside enhanced tracker options

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