Africa Finance Corp (AFC) said it issued a three-year $150 million sukuk, becoming the first African government-backed entity to sell an Islamic bond.

The announcement confirmed a Reuters report this month that the bank would raise a dollar sukuk through a private sale.

AFC, a pan-African institution based in Nigeria, said it received subscriptions of $230 million for a debut sukuk initially planned to raise $100 million. It did not disclose the yield.

“This sukuk represents a milestone in our financing activities … to build new relationships,” its Chief Executive Andrew Alli said in a statement.

AFC was set up by African governments and the private sector in 2007 to mobilise investment for infrastructure across the continent. It has since invested more than $4 billion in 26 countries.

Other African-based issuers are likely to follow with sukuk of their own, analysts say, as Islamic bonds can be cheaper than conventional bonds, especially when interest from the market is high.

Nigeria, which has the largest Islamic population in sub-Saharan Africa, is already looking for advisers to organise its first Islamic bond in the domestic market.

AFC’s sukuk is structured with a murabaha format, a popular structure in Islamic finance in which buyer and seller agree a price mark-up. Moody’s Investors Service assigned it an A3 credit rating.

Emirates NBD Capital, MUFG and Rand Merchant Bank acted as joint bookrunners on the transaction.

(editing by John Stonestreet)