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Zambia Raises $750Million In Debut 10-Year Eurobond
Zambia sold a debut $750 million, 10-year Eurobond with a yield of 5.625 percent on Thursday, a market source said, adding that more than $11 billion of orders were received for the issue.
The popularity of the issue by Africa’s biggest copper producer reflects strong investor appetite for scarce frontier African paper.
The yield was 25 basis points tighter than Zambia’s initial 5.875 percent guidance.
The size of the Zambian bond also means it will be eligible for the JP Morgan EMBI Global index, increasing its appeal to major investors.
The southern African country, which is rated B+ by Fitch and Standard and Poor’s, plans to use proceeds from the issue to upgrade its infrastructure, particularly in the transport and energy sectors.
Fitch cited the country’s buoyant copper mining sector, political stability and GDP growth of over 6 percent as strengths, but said prospects for growth beyond 2012 were less certain due to dependence on copper, which accounts for about 80 percent of exports Heightened global risk appetite and Zambia’s well-planned roadshow were the biggest factors behind the success of the issue, the investor said.
“The general global backdrop is pretty favourable at the moment. There’s been a lot of cash inflows into emerging market debt looking for a home,” he said. “They made a good case for the credit and timed it very well.”
Zambia plans to use proceeds from the issue to upgrade its infrastructure, particularly in its transport and energy sectors.
It is looking to invest over $1 billion in infrastructure projects, especially roads and rural power.
The southern African country has an annual infrastructure funding gap of $500 million, according to the World Bank, which estimates that improvements in this area could boost growth by up to 2 percentage points a year.
Its foray into international capital markets also shows Zambia understands the need to seek other sources of funding as foreign aid budgets decline, said Jan Dehn, portfolio manager at Ashmore Investment Management.
“Other African countries need to take note of this because they’re going to lose donor money,” said Dehn. “Just look at how terrible the fiscal situation and the growth situation is in Europe. Many of these countries are still completely dependent on donor finance.”
Nigeria is considering issuing a second Eurobond of up to $1 billion to fund its power and gas sectors, finance minister Ngozi Okonjo-Iweala said last month.
Kenya also aims to issue a dollar bond of a similar size in the 2013/14 financial year. (Reporting by Tosin Sulaiman; Editing by Ed Cropley, Ron Askew)
Posted by
MUNYELO PWETE!
September 13, 2012 at 7:29 pm
That is my government at work! Woe to this ka thing called hh noyu fallen pastor!
chishimba
September 13, 2012 at 8:49 pm
if God is for us who can say no it wont be possible to give a better life to our people
milimo
September 13, 2012 at 10:09 pm
Zambia watchdog shame on u liars,wish i can see your editor in Chief and how his face is looking for this success thumbs PF indeed if God is with us who can be against us stop being petty just join the wining Team we develop mother Zambia.to the Government please use this money wisely please.
risk taker
September 13, 2012 at 10:30 pm
so how do you proceed if you in Zambia? like buying the same
Tupac
September 14, 2012 at 9:52 am
Kontinue the work shikulu we are with you
Bring more development in zambia so that this mathafackaz can be shamed.And in case you didn’t know haterz you will neva rule zed until afta 50yrs.
isaac
September 14, 2012 at 10:39 am
THE haters who like seeing the country plummeting will die with shock.Why hate some one who is trying to resurrect the nation from its total colaspse. PF at work. Happyyyyyyyy!
bexx
September 14, 2012 at 12:09 pm
Bravo PF govt…my vote is at work and kam 2016 i will still give u my vote no matter wat…
Wanyafye Tigers
September 14, 2012 at 1:06 pm
Good way to go PF. There are better and more honorable methods of raising finance that going begging. “To be invested in infrastructure” – now that is a plus!!!
ABAKONZI
September 14, 2012 at 5:16 pm
World over this is how money is raised for major capital projects and we just need to support Sata on this one.However @ Wanyafye Tiger let’s ensure that these funds are used for the intended purpose and then we shall live to see a better zambia because these are the signs.Indeed its a plus….!
CHINVINDINVINDI
September 14, 2012 at 7:56 pm
We give praise to God for PF. WHAT HAS THE HUNGRY HYENA SAID? NEVER NEVER WILL GO FOR PUNCH FOR PUNCH! HIS BOXING PARTNER IS BUSY AT WORK..
PERPETUAL CRYING BABIES!