Since 2013, TCX has been increasingly working with shareholders, banks and other parties on the issuance of bonds and notes denominated in or linked to local currencies. By creating the market ‘sell side’ and generating private investors’ interest, TCX is supporting the development of capital markets in frontier currencies.

Although TCX does not issue these bonds itself, its role is crucial, as it hedges the local currency payment obligations (coupon and principal payments) deriving from these bonds with the issuing institution, usually one of its DFI shareholders.

These bond issues increase the depth and efficiency of capital markets in frontier currencies and have a signaling effect for financial institutions onshore. Furthermore, since TCX pays local currency* and receives hard currency – whereas the Fund is usually on the LCY receiving end in a swap – the currency risk in its portfolio is reduced. This results in a more efficient usage of capital and frees up extra hedging capacity for its shareholders.

So far**, TCX has hedged local currency bonds and notes for an amount of well over USD 1.3 billion, in 28 different currencies, among others the Armenian dram, Costa Rican colon, Dominican peso, Georgian lari, Honduran lempira, Kyrgyzstani som, Myanmar kyat, Pakistani rupee, Sri Lankan rupee, Tajikistani somoni, Tanzanian shilling, Ukrainian hryvnia and West African CFA franc.

See for more information also the page on the TCX Frontier Index.

* Even though these bonds are linked to or even denominated in frontier currencies, they are usually settled in hard currency, typically USD or EUR.
** As of February 2022.