Product offers exposure to nine currencies
Leveraging off their extensive African presence, Absa Capital, the investment banking division of Absa Bank Ltd, in conjunction with its global affiliate, Barclays Capital has launched a diversified Sub–Saharan Africa currency product aimed at institutional investors and hedge funds.
The long–only product, known as Global Emerging Markets Strategy Sub-Saharan Africa or GEMS SSA, allows investors a first time opportunity to earn the yield on treasury bills in nine well diversified pan-African currencies.
The currencies are the Ghanaian Cedi, Nigerian Naira, Ugandan Shilling, Kenyan Shilling, Tanzanian Shilling, Botswana Pula, Zambian Kwacha, Namibian Dollar and Mauritian Rupee.
Mike Christelis, Head of Africa Trading at Absa Capital, said, “The introduction of the Global Emerging Markets Strategy or GEMS in Africa was in response to growing investor demand for emerging market asset classes, as they have historically offered high returns and low levels of volatility.”
The strategy gives investors immediate exposure to the nine constituent currencies in a simplified, easy to access manner, with a predetermined bid offer spread and exit mechanism.
“Typically exposure to these currencies would have required multiple transaction costs, presented timing challenges and offered no guaranteed exit strategy. This is all avoided with the GEMS SSA product,” added Christelis.
The GEMS strategy is based on investing into 6 month synthetic treasury bills across the nine African currencies. Investors take the currency and interest rate risk of the constituent currencies, without taking the exposure to government credit. Investors are instead exposed to Barclays Bank plc, which has an AA rating.
Access to this strategy is via investment in a two-year Barclays US Dollar Note that pays the yield on the 182-day government treasury bill on a rolling basis, net of all taxes and duties.
The daily Strategy Level is published on Bloomberg under the ticker ‘GEMSSSA’.
About Absa Capital
Absa Capital, a division of Absa Bank Limited (Absa) and affiliated to Barclays Capital, is a leading South African investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.
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