$1bn bond offer: Zambia eyes Nigeria

The Lusaka Stock Exchange, Africa’s fourth-best performer this year, is turning to companies and finance institutions to tap growing demand for debt with as much as $1bn in bond sales as the government boosts spending to sustain growth.

The plan came on the heels of Nigeria’s recent $1bn Eurobond offer, which was oversubscribed.

Bloomberg reports that the African Development Bank is set to follow the International Finance Corporation’s local-currency Zambezi bonds that were 4.8 times oversubscribed when 150 million kwacha ($28m) of the medium-term notes were sold, according to the IFC.

Standard Bank Group Limited’s Zambia unit has registered to sell one billion kwacha of debt, according to the country’s Securities and Exchange Commission’s boss, Mr. Wala Chabala.

Chabala said, “Our markets are certainly poised for a take-off. We are having quite a resurgence of capital markets in the country.”

Companies in Zambia, Africa’s biggest copper producer, are benefiting from an economy that’s expected to grow six per cent this year and 6.5 per cent in 2014, according to the International Monetary Fund.

Zambia’s Minister of Finance, Mr. Alexander Chikwanda, increased spending for next year by 33 per cent, with the biggest allocations going to roads, education and health care.

Yields on Zambia’s Eurobonds due September 2022 were little changed at 6.68 per cent in London, the lowest since June 19.

The yields have risen 1.25 percentage points this year to Thursday, compared with a 0.97 percentage-point advance in Nigerian debt due January 2021, according to data compiled by Bloomberg.

Zambia’s budget deficit will probably reach about 8.5 per cent of gross domestic product this year, wider than the 4.3 per cent earlier projected.

The Africa’s biggest copper producer remains vulnerable to a decline in the price for the metal and an economic slowdown in China, its biggest export market.

The country is rated B1, four steps below investment grade, on par with Ghana and Senegal.

The IFC said it could issue as much as 2.5 billion kwacha in bonds and the first tranche is listed on the Lusaka Stock Exchange.

The bourse is set to get stock listings before the end of the year from an insurance company and a property company.

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