GOVERNMNET says it will proceed with plans to sell a US$500 million euro bond to foreign investors once it receives a sovereign credit rating before the end of the year.
Minister of Finance and National Planning Situmbeko Musokotwane said discussions are currently underway with the advisers on the issuance of a euro bond for the country.
In 2009, Zambia postponed plans to seek a credit rating and sell its first global bond of US$1 billion because of the global financial crisis.
“We are still waiting for a preparatory report from our advisers. We just need about US$500 million now,” he said.
Dr Musokotwane was speaking in an interview in Lusaka on January 19.
It is expected that after the rating is given to Zambia, the cost of borrowing will significantly reduce for both the public and private sector.
Through a euro bond, Zambia expects more developmental projects to be financed while the private sector, more especially mining firms, will borrow at a low cost to finance their huge projects.
Other countries in the region considering issuing euro bonds are Tanzania and Angola while Sudan is likely to sell US$300 million of Islamic bonds next year.
There are only seven sub-Saharan Africa countries that have issued sovereign bonds, namely South Africa, Seychelles and Senegal. Others are Ivory Coast, Gabon, the Democratic Republic of Congo and Ghana.
[Zambia Daily Mail]
Good News.
Majority of Zambians will not benefit. Only the same mines that are making a killing will print money since Musokotwane is averse to collecting our bonanza in the form of Windfall Tax. Kuya Bebele.
Thats the way to go.Keep it up govt.Lets have the credit rating first then offload those bonds.Negeria just did and it was succesful so can we.Dot bother abt the PF kaponyas they dt understand corporate issues.I wonder if Sata knows what a Eouro Bond is….am sure wat comes to his mind is a police bond since he was once a constable.
$500 million euro bond – what currency is that?
This option can only be attrative to foreign investors if there is law and order in Zambia. At the moment, MMD cadres led by William Banda are controlling government affairs. These cadres grabbed land, already on title, belonging to 2 foreign investors of Indian and German origin in Lusaka’s Ibex Hill area and the President of Zambia has to-date not addressed the situation. Further, the recent land scum at Lusaka City Council is testimony that the Government has lost control over land issues in Zambia. So, how can investors buy the US $ 500 Eurobond in such a scenario? Investors will not come to a country with no law and order! Even Zimbabwe is a more attractive alternative where President Mugabe has control over land issues, despite their political problems!
London Irish I agree with you. If people really understand what a foreign Bond is, well issuing it now, before elections is risky, especially for investors (who will buy). Foreign Bonds make sense when the country shows stability over a period. With the coming elections, come on, thought we had people that have had a few lessons in finance?