MAURITIUS Law and Practice Contributed by: Gilles Athaw, Jason Barbe, Deeviya Rughooputh and Sushika Ramlugun, Bowmans
tions aim to enhance returns while preserving flexibil- ity. This approach has been pursued with heightened caution, as banks remain mindful of potential market volatility, currency depreciation risks, and the broader global uncertainty arising from geopolitical tensions and financial market fluctuations. Collectively, these dynamics underscore the delicate balance between growth ambitions and risk management that charac- terises the current banking sector strategy in Mauri- tius. 1.3 The High-Yield Market The ability of corporates to raise finance by issuing high-yield corporate bonds has made them less reliant on banks for funding. Some corporates also leverage on high-yield bond structures to refinance existing bank loans via bond issuance. The domestic bonds market has been very active recently. From an international perspective, Mauritius has also been a popular platform for the issuance of these types of instruments, either through Mauritian special-purpose vehicles or through foreign corpo- rates listing their high-yield bonds on the Mauritian stock exchange. 1.4 Alternative Credit Providers Peer-to-peer lending has proved very popular among start-ups and sole traders who seek microfinancing or financing of their working capital, supply chain or business expansion. This platform has also gained an increased interest among lenders who are currently incentivised by ben- efiting from an 80% tax exemption on interest derived from a qualifying peer-to-peer lending platform. Other alternative credit providers such as money lenders or credit finance providers licensed by the Financial Services of Commission of Mauritius are also providing funding options, and it is anticipated that access to credit will improve the performance of Mauritius and African businesses as the total amount of capital available rises and the investment ecosys- tem develops. Peer-to-peer lending and other alternative credit pro- viders are still, however, in their infancy and require
time for mass adoption. Consequently, despite their growing popularity, the volume of funds raised on peer-to-peer lending platforms and other alternative credit providers is not significant enough to disrupt the traditional banking market, which remains the favoured financing route. 1.5 Banking and Finance Techniques From a corporate lending perspective, a clear trend in more sophisticated lending structures has surfaced. Mezzanine financing and quasi-equity instruments are being used with the aim of creating long-term value for local projects. Local banks have also showed robust participation in syndicated financing on local and outbound pro- jects, as well as cross-border financing. Alongside this, there has been a notable growth in fund financ- ing in support of private equity and investment funds operating in Mauritius. 1.6 ESG/Sustainability-Linked Lending In recent years, Mauritius has acknowledged that sus- tainable finance is a catalyst for change. In June 2021, the Bank of Mauritius published a guide for the issue of sustainable bonds in Mauritius, and in December 2021, the Financial Services Commission issued a guideline for issue of corporate and green bonds in Mauritius. Most recently, the Financial Services Com- mission introduced the new Disclosure and Reporting Guidelines for ESG Funds. In light if this guideline, investment businesses are now required to ensure greater transparency, consistency and accountability in how ESG strategies are disclosed, implemented and reported. To embed ESG standards across the financial sector, on 18 January 2024, the Financial Services Commis- sion issued a draft rule for a Mauritius Green Fund for public consultation. In essence, the Mauritius Green Fund must meet one of the green criteria that is endorsed by the Financial Services Commission and must be established with the objectives of spreading risk and seeking a return for investors whilst mitigating environmental damages. While this rule is not yet leg- islated in Mauritius, it is a step forward to the adoption of ESG principles in the financial sector.
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