Zambia to issue $500m euro bonds in 2011

Situmbeko Musokotwane, Zambia's Minister of Finance and National Planning, has announced that the government will issue a $500 million (€365 million) euro bond before the end of 2011.

The aim is to finance development projects and allow companies to borrow at a low cost to finance their initiatives.

The bonds will be issued once Zambia receives a sovereign credit rating, expected this year, as the new rating should reduce the cost of borrowing for foreign investors.

“We are still waiting for a preparatory report from our advisers. We just need about $500 million now,” Mr Musokotwane told the Zambia Daily Mail.

The announcement was followed by Nigeria's $500 million euro bond issue on Friday. Kingsley Moghalu, the Central Bank's deputy governor, told NAN news agency that it was two-and-a-half times oversubscribed, with a yield of seven per cent and a coupon rate of 6.75 per cent.

He added that the aim of the euro bond issue is to set a benchmark for borrowing on the international capital market, especially by Nigeria’s private sector.