Zambia’s Eurobond sale on course
By Nawa Mutumweno – HSBC Holdings Plc and Rabobank’s Zanaco (Zambia National Commercial Bank) are among the top bidders to become bookmakers for Zambia’s first Eurobond of $700 million.
According to Secretary to the Treasury, Fredson Yamba, Zambia will meet investors to gauge interest for its debut Eurobond within two months.
The Zambian government is seeking two bookmakers and a legal advisor. Rabobank owns 49% of Zanaco. A number of South African and Zambian lenders have also expressed interest in bookmaking for the country following an advertisement in local and foreign newspapers.
Zambia is to sell a 10-year Eurobond this year to raise funds for infrastructure and other construction projects, Finance minister Alexander Chikwanda announced on November 11, 2011.
The bond stalled from last year as the Eurozone debt crisis stifled demand for debt. Zambia has been rated at B+ by two international rating, Fitch and Standard and Poor’s. This is four levels below investment grade but better than several African countries.
Experts say that Zambia is one of the more stable countries on the continent at the moment. It is one of the biggest foreign direct investment (FDI) recipients, mainly due to its robust mining sector. Zambia is Africa’s top copper producer.
“I think the European countries are looking for a stable destination to economically partner with and Zambia right now presents that opportunity,” Mr. Yamba elaborated.
Zambia will join other sub-Saharan African countries such as Nigeria, Ghana, Gabon, Senegal, Seychelles and Namibia, which have undertaken the initiative.
Permanent secretary in the ministry of Finance Joseph Kinyua disclosed last December that Angola, Africa’s second largest oil producer Nigeria, and Rwanda also plan to raise capital from the global market. The Kenyan government cancelled plans to sell a Eurobond this fiscal year and may instead raise $600 million from international banks.
Nigeria, Africa’s largest oil producer, which is also rated B+ by S & P, in January 2011 sold its first dollar-denominated debt. The yield on the bonds due 2021 has fallen 93 basis points since the issue to 5.86%, according to data compiled by Bloomberg.
