The Ministry of Finance has allayed fears that the planned issuance of Zambia’s debut USD 500 million sovereign bond is in near collapse after it was reported that potential investors had expressed concerns over the attractiveness of the bond.
The Zambian Government under the MMD administration had long planned to enter market and borrow over USD 500 million for massive infrastructure development and other capital projects.
The 2008 global economic crisis and the 2011 general election forced the project to be put on hold but the PF administration quickly restarted the project upon assuming office.
At the end of May 2012, the Ministry of Finance announced that Barclays and Deutsche Bank had been picked as book runners while US law firm White and Case will act as legal adviser.
Rising concerns over policy inconsistencies by some top PF government officials and a volatile political environment have however added to concerns that the bond issuance might be a flop. [pullquote]“Yes we were supposed to have started a major investor roadshow to market our issuance this August but we had to push that to a later date due to some technical and logistical challenges.”[/pullquote]
But Ministry of Finance Chief Economist Akapelwa Imwiko said in an interview that the project to sell the first sovereign bond by a Sub Saharan country this year is firmly on course.
Mr. Imwiko said significant progress has been made and expressed confidence that Zambia will go to the markets before the end of the year.
“We are progressing well, am in the technical committee working with our book runners and our legal advisers and I can tell you that there are no major hiccups,” Mr. Imwiko said on the sidelines of a two media training on economic reporting in Lusaka.
He however admitted that the international roadshow which had targeted to hit a number of selected European and US cities had to be postponed.
“Yes we were supposed to have started a major investor roadshow to market our issuance this August but we had to push that to a later date due to some technical and logistical challenges.”
On concerns that the timing of the issuance might hurt the pricing of the bond, Mr. Imwiko said the Ministry is aware of such concerns and will keep a close watch on the markets to ensure that the recent volatility does not affect the bond issuance.
“We are watching the markets closely, we want to go live when we see that the markets are now more stable, we don’t want to be caught off guard and so we have heightened the level of preparedness,” added Mr. Imwiko.
[pullquote]“Admittedly, what people could be referring to as policy inconsistencies are merely minor policy adjustments meant to fit into the broader PF vision of people centered development,” he said.[/pullquote]
“What we don’t is a situation where the markets are ready and we are not ready, so timing is everything.
He also parried concerns that the PF administration lacks a clear policy direction on a number of key economic issues.
“The truth is that we are still implementing and operating within the same key macroeconomic framework, guiding us is the Sixth National Development Plan and the Vision 2030, so broadly, we are within course.”
“Admittedly, what people could be referring to as policy inconsistencies are merely minor policy adjustments meant to fit into the broader PF vision of people centered development,” he said.
Mr. Imwiko has since advised those criticizing the PF over its economic policies to familiarize themselves with some policy documents such as the 2012 national budget and the Sixth National Development Plan.
I stopped reading anything from Ministry of Finance, because of their FAZ treasurer’ Sampa thing. What a Zambia.
The painting of Jacob Zuma in traditional attire, with his weapon hanging shows that some countries their leaders can be insulted. But in Zambia calling your friend a Chimbwi, then you are calling a Great Bully Man (GBM) go after you every single night. Atleast his wife is saved from weekly beatings.
Are you deliberately over-looking the fact that the painting you talk about is being attacked left right and centre?
FP in power was a costly experiment. Anyway they have 3 more yrs to go. MMD is still very strong especially that now people understand the donti kubeba thing. Besides with the 50+1 and GBM kind of polifics PF will tumble
Instead of counting on international investors, the govt should hunt the looters…
For example Mopani has diverted at least $500 million since 2003
According to NGOs in its 2010 pilot audit by Grant Thornton, Zambia and Econ Poyry, Zambia lost an estimated income of USD 175 million in tax revenue between 2003 and 2008 from tax avoidance practices’ by Glencore AG International owned Mopani Copper Mines.
copper from Mopani is sold under a contract with copper in one instance being sold at 25 per cent of official prices at LME. In other words, they are not paying taxes over 75% of the copper sold to Glencore.
“Zambia continues to lose on dividends
-continued –
from Mopani Copper Mines as the Glencore owned mine never declare any dividends to Zambia Consolidated Copper Mines InvestmentHoldings. During the period under review, Action Aid estimates that the Zambians government lost an estimated USD 50 million per year in undeclared dividends to ZCCM IH by Mopani.Copper Mines, according to Action Aid was avoiding declaring any dividends by ZCCM IH through transfer pricing and over statement of the costs.”
“The auditors found that MCM resisted the pilot audit at every stage. The company’s book-keeping was incomplete, several legally required documents were lacking and the general ledger analysis showed several loopholes and couldn’t be matched with the trial balance,” the organisations stated.
Why would a serious government fail to put in place logistics that will bring USD 500 million? This is a sign that this is not a serious government. Imwiko, just admit that the sovereign bond collapsed already, this is why the planed international roadshow had to be postponed.
No serious investors bring investment to Zambia which is being run like a kingdom with visionless leaders. :-@[-x
-continued-
“The auditors also found an inexplicable doubling in the costs of the company between 2005 to 2007, which shows that the company has been artificially inflating its costs to minimise the profits shown in their books so that they could pay less taxes. Despite the fact that the audit was finished in the fall of 2009, it was kept secret.”
BANDA and his HENCHMEN WERE COMPLETELY CORRUPT BUT WHY PF GOVT CLOSES ITS EYES WHEREAS ZED NEEDS MONEY ???
Most of my intellectual friends that surpoted PF now feel embarrased and have U-turned. You fellows I will publish yours names in the press
I won’t comment chizungu ca nipita as a pf kaponya I don’t know fyama bond bond is it kaloba or shani, n way am not alone and comments will be verry few on this article
Viva revolution.
I’ve a strong feeling ;this will be the best government ever.
Scotland is cold this morning, no more than 2 degrees
This what the weather should be, when it is too hot you end up getting a little darker than you are, and I hate carrying an umbrella to protect my skin when the weather is in excess of 30degrees . t is probably because of my white fiancé and I have to conform, to the standards expectant of a black woman with a Whiteman in her life, these are rare occurrences and missing or breaking such an unprecedence bond between us, is close to suicide
How is Zambian again?
Thanks
How many white customers did you receive in your brothel tonite?
You travel girl, you grow. Make sure to protect your happiness. Don’t let jealous or small-minded guys talk s*it to try to keep you down.
LT are you sure that picture is Zambia, the bellmouth of that picture is all whites at the entrance
Just my thoughts
Thanks
They criticise merely to demonize PF. That’s the sad part. Many of those criticising are basing their argument on short sightedness. They can’t see the bigger picture, that bigger vision for the country based on medium and long term. Their criticism is based on short sighted day to day occurancies. Don’t run marathon with a 100 meters sprint mentality. You know what am saying.
What a joke! Which inverstor will buy bonds from the PF government.
Why not? Buying from the country Zambia, what is your country called? Once that funding is sourced you anf your relatives shall benefit. Whether under UNIP,MMD or now PF, its meant for Zambia. No other party has ruled Zambia yet. Talk of the bird in the hand is better than the one flying, you may never catch the flying one.
No we don’t know what you are saying! What is PF’s medium and long term vision? What Imwiko is confirming is that PF just took over from where MMD left and they do not even understand the process that led to Vision 2030. MMD has the master plan and PF are at the wheel without a roadmap. You will know PF by their results.
Hey, wena, Floyed Chitalu and nalona u Mushota, listen
No single person wants to waste his/her precious time on providing biased views against your hegemonic regime (PF govt.). All that we are donating on internet is to educate those whose tendency is that of disinsterestedness, and you are definately one of those people who refuse to admit that all is not well. You cannot even provide any plausable premises to advocate the argument which you are attempting to project to progressive people such as myself. There is a possibility that you are a recipient of remunerations from the above regime. Wena, Mushota, Europeans are in a dilemma at this point in time. Zambians are far much better than most europeans and I fail to comprehend why you are so much obsessed with these people, shame.
Borrowing money just to fund 100% pay rise, pay my bemba bululu’s, and mmembe. Also some for GBM to corruptly secure
and some opposition clowns out their claim to be finance or economic experts… ignorance is a problem.. Zed is moving.. the sheer volume of CAPEX being imported, cleared and moving into the country is major. Everyone is building plants and bringing in transportation fleet with reduced import taxes and duties for CAPITAL equipment. while you useless diaspora bloggers are listening to non entities and wasting time blogging, the rest of us are developing our projects taking advantage of the lowere borrowing costs, lower inport duties and recently grade peri urban and tarred urban roads. Nobody here listens, knows or even cares about your tuma opposition leaders or even the PF. Stop blogging and start working. sharp ones have brought trucks from UK and are moving maize for FRA
Here we go again on a borrowing spree.Run zambia ltd prudently debt just enslaves the sovereign state you wish to remain
We should forget about this bond. This is a white elephant for now. It’s like PF will only settle a year from now. Until then, we should forget it!
awe mwandi upnd ll followers ll die na cinkonko
The truth of the matter is that the international financial markets have seen that people like Mahtani and Finance Bank have made the bank regulator (BOZ) toothless. Without a bank regulator who is respected the bond issue will not be taken up by any serious investor. Mahtani is a liability to every Zambian.
@Jasmin. You are right. There is no way that serious financial players will do a due dilligence on Zambia and fail to pick up the way that Mahtani and Finance Bank manipulate Bank of Zambia and the PF Government. The 2008 financial crisis was sparked by a serious lack of supervision of the financial markets. Zambia’s situation is as risky and volatile as Wall Street was when the Bernie Maddofs (Mahtani) triggered a series of bank and insurance company failures that effectively halted global credit markets. Fannie Mae and Freddie Mac were both taken over by the government. Lehman Brothers declared bankruptcy after failing to find a buyer. Finance Bank and Proffessional Insurance Ltd will scare away prudent investors as they represent a replay of the World financial meltdown of 2008.
I’m no financial expert but the kings of libor wanted in on this so bad. If anything their emerging market gambling casino like swag is turned on by people being potentially asleep as they do business (I don’t believe this is the case). No need to pretend the clean cut, well intentioned, angelic banks are saviours of the altruistic type. Zed has untapped wealth and our banking partners know exactly how to tap that a$$ :)
I don’t ususally blog but when I accidentally came across a debate on the sovereign bond that was clouded by ill informed opinion I felt compelled to contribute from a legal professional viewpoint and not political one. A bond issue is apositive thing for Zambia in the sense that rather than begging for aid Zambia has gone out in the international capital markets to raise funds on a strictly commercial basis without someone feeling sorry for us and giving us aid because we are poor but rather from purely commercial reasons. For the international capital markets to give you money they subject the borrower to serious scrutiny and analyse the rate of possible default and future performance and prospects.