Zesco Ltd Zambia’s state-owned power utility, has sent managers to the U.K. and the U.S. in a bid to raise as much as $2 billion in debt from investors there, Managing Director Cyprian Chitundu said.
Standard Bank Ltd. is advising the company, which met investors in London, Boston and New York, Chitundu said in an interview on November 29 in Livingstone.
“We are probably talking $1 billion, probably even $2 billion,” Chitundu said at the Zambia International Investment Forum.
Zesco plans to spend on average $1 billion a year over the next five years as it seeks to end a power shortage that has led to blackouts across Africa’s biggest copper producer, preventing the mining industry from gaining the full benefit of higher metals prices, with copper rising 6.8 percent in the third quarter.
The utility is also considering raising finance through a Eurobond, similar to the $750 million raised by the government in September, he said.
Zambia is rated B1 by Moody’s Investors Service, the fourth-highest junk rating. Eskom Holdings SOC Ltd., the South African power utility that’s rated four steps higher, issued $1.75 billion of bonds maturing in January 2021 last year. The yield on the debt has fallen 151 basis points this year to 3.97 percent.
Zambia’s kwacha has declined 3.8 percent against the dollar since June 30, trading at 5,223 by 3:45 p.m. in Lusaka on November 30.
Zesco’s management team has already visited London, talked to investors in Boston on November 29, and ended with meetings in New York on November 30, Chitundu said.
The company also plans to list on the Lusaka Stock Exchange within two years, he said.
[Bloombergbusinessweek]
