LUSAKA, July 24 (Reuters) - Zambia has issued a $1.25 billion eurobond meant for infrastructure development at a coupon rate of 8.97 percent, a government statement seen by Reuters on Friday said. (Read more)
According to the President’s special assistant for PR, the government was looking to raise between $1.5 and $2 billion. An update from the Financial Times indicated that the offering started off with tepid demand at the beginning of the day but picked up significantly toward the end of the trading day with the order book exceeding $2.5 billion. The issuance coincidentally happened on the same day Goldman Sachs revised down their global copper price projections - in a week when commodities from gold to oil were down big!
Today’s Treasury bill (T/bill) auction attracted K983 million in bids of which K427 million were allocated:
Yesterday’s Treasury bill (T/bill) auction attracted K311 million in bids of which K160 million were allocated:
The subscription rate on the 14th auction of the year declined to 34.58% (62.3% at auction 13). The Minister of Finance indicated that the Government would cut back on domestic borrowing to finance the 2015 fiscal deficit for fear of further pushing up yields - and subsequently interest rates:
2014 has been a bit of a rollercoaster year for Zambia. The country lost President Michael Chilufya Sata to illness a few days after celebrating its 50th year of existence. The consumer was under tremendous pressure as the effects of a weaker Kwacha took hold over the course of the year.
Zambia issues $1bn dollar bond
The government issued a second successful offering albeit at steeper conditions than the debut bond. The funds have been pledged to the transport and energy sector but with no specifics as of yet. What is most important now is the execution - this money needs to be put to work efficiently, more efficiently than the pace at which the $750m was utilized. The quicker the projects are done the quicker the pay-back period will be...
Two weeks before the $1bn bond offering, there were investor roadshows in Los Angeles, San Francisco, Boston, New York and London (the same destinations as before the 2012 offering). The final allocations by industry were as follows:
When the Minister of Finance was presenting the K42.7bn 2014 national budget in October last year, he highlighted that 25% of it would be financed by a combination of domestic (K3.5bn) and foreign debt (K7bn). It’s no secret that there was a Zambian delegation which included the Bank of Zambia governor on a USA coast-to-coast roadshow which was wrapped up at the tail-end of last week in London. Yesterday Reuters reported that Zambia had launched a 10 year, $1bn Eurobond at a final yield of 8.625%. This is the second Eurobond launched in the space of 2 years.
World Bank Enterprise Survey - Zambia 2013
The World Bank did an enterprise survey of 720 firms operating in Zambia (Lusaka, Kitwe, Ndola and Livingstone) which highlighted the biggest obstacles faced by businesses in this country. The results were as follows:
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *