A TEAM from global rating agency, Fitch, are in the country to assess the credit worthiness of Lusaka City Council (LCC). The local authority plans to issue the US$500 million municipal bond.
The Fitch officials were scheduled to meet Lusaka town clerk at 15:00 hours yesterday to discuss various issues regarding the operations of the council.
“The officials arrived in Lusaka yesterday; we are scheduled to have a management meeting with them this afternoon. The team is also expected to pay a courtesy call on Lusaka mayor,” said Lusaka town clerk Moses Mwelwa.
He was speaking in an interview in Lusaka yesterday.
Mr Mwelwa, however, said the meetings with the agency officials will be closed to the media.
He expressed optimism that the international agency will give the council a positive rating as it seeks to construct more housing units for the public to help avert the shortage of housing.
Meanwhile, LCC is working on modalities to commence the evaluation process of the 15 institutions that expressed interest to become book runners and legal advisers.
Mr Mwelwa said the council will only shortlist firms after the evaluation process has been successfully done.
Recently, 15 local and international institutions expressed interest to become book runners and legal advisers for the planned US$500 million municipal bond to construct 3,500 high-rise units in Lusaka.
This followed the tender which closed and opened on February 7, 2013.
The council is looking for one viable book runner and one financial legal adviser.
Once that is done, the local authority plans to construct 500 basic flats in each of the seven constituencies of Lusaka.
The development is aimed at addressing the housing shortage affecting the capital city.
The housing project targets the low, medium and high income groups in all urban constituencies of Lusaka.
What rating are they coming to do? Please give us a break. All they want to see are the assets of the local govt in the event they fail to pay, of which they will. We should be ready for more taxes in this nation, to pay for all these loans at some stage.
What alternative solution do you have?
That is normal practice. Every lender would want to know the amount of assets the borrower has i.e collateral before they lend you money!
LCC wants to issue what are called Municipal Bonds, which are different from Sovereign Bonds. Unless the MBs will be backed by a GRZ guarantee they have to be independently rated. So, the process will not only involve assessment of assets but the business plan and repayment source. It is unlikely that the MBs will rate higher than the SBs. Expect probably B or CCC rating.
@ Zed@crossroad, without a rating from a rating agency, what it means is that the council may fail to borrow the money as the rating is a requirement from the lenders or investors if you like. The rating is also used to determine what interest rate to use as the council’s creditworthness would have been assessed. So basically the higher the rate the council can get the lower the interest rate investors will place on the bond.
If the houses had not been sold LCC would be more creditworthy than they are at the moment, though they still have a few buildings around.
Finally the idea of high rise flats is coming to fruition! This is the quickest way of increasing the supply of housing in Lusaka in an affordable and sustainable manner that makes maximum use of the little land available in Lusaka. Way to go LCC, I am with you all the way on this.
Hoping they will having accompanying systems in place. For example, working fire hydrants, elevators, fire escapes and not forgetting the need to have acquire for the fire department appropriate emergency equipment.
This week the very same credit rating agencies including Fitch are under fire in the US for taking bribes in exchange for high credit ratings.
The entire ratings industry is one big fraud
I think we live in “Cuckoo land!” Highrise Residential Buildings ??? We scoff at Chirwa with his modern plans – this was a hands on man! As Kuta has rightly pointed out, IT IS THE SUPPORT STRUCTURES WHICH ARE MOST IMPORTANT – Fire services, Lift companies, Proper drainage, & RELIABLE CONTINUOUS ELECTRICITY SUPPLY!!
We have had the “Kabwata experiment” – I guess Kabwata is a SHOW PIECE!!! we should take Fitch around to see this show piece!! High Rise buildings are NOT JUST ABOUT CONSTRUCTING! They are ABOUT MAINTENANCE!! Clients should be able to afford – It is either LCC has A VERY BOLD PLAN of Rehousing those in shanties (though i wonder about their pockets) or Zed/Lusaka has suddenly become a TAX FREE HAVEN attracting new residents with dosh!!
Sori mentioned Kuta above, but actually MEANT “Drive” whose comment highlights the support needs!
LT where is my original post??
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