Post date: Sep 28, 2010 11:25:39 AM
Zambia cuts the size of a planned international bond by half from 1 billion U.S. dollars, after Chinese investors agreed to fund a key power project.
LUSAKA, ZAMBIA (SEPTEMBER 25, 2010) REUTERS - Zambia has cut the size of its planned international bond to 500 million U.S. dollars from one billion, after Chinese investors agreed to fund a key power project that needed financing, the finance minister has said.
Situmbeko Musokotwane told Reuters Zambia was able to cut the size of the issuance, which is planned for the end of next month, after Chinese firms agreed to help fund a one billion U.S. dollar power project.
"Instead of borrowing this money, which was the original thought, this time this money is going to come most of it as PPP -- Private Public Partnership so investors out of China possibly out of other countries will bring the money, will participate in that investment so we have to borrow money to borrow money to provide our equity investment but clearly the amount that we have to borrow this time its going to be much much smaller. So, therefore, we think that we are going to scale back our requirement from one billion maybe to half a billion. You asked about the use of that, most of this (money) we want to fix and construct new roads," he said.
Zambia, Africa's largest producer of copper, is being advised by JP Morgan Chase and Company as it seeks its debut credit rating ahead of the bond issuance.
Musokotwane declined to say what rating the government was likely to get. Zambia abandoned plans for a credit rating in 2008 because of the global economic crisis.
Signs of an economic recovery have prompted the government to issue debt now, he said.
"When the price of copper had collapsed, when companies were closing, what we would be talking about today would be a different story. Copperbelt would be in ruins, the economy of Zambia would be in ruins but because we wisely stuck to that position, even with a lot of criticism, this is now what you see last year the economy grew by 6.4 percent one of the highest in Africa, one of the highest in the world. This year we are still projecting 6.6 percent, again one of the highest in the world, one of the highest in Africa so, people should judge us by the results, which we are demonstrating," he said.
Benchmark copper CMCU3 is up nearly 8 percent so far this year, following a 140 percent surge in 2009.
Global ratings agencies gave oil-producing Angola a debut "B+" rating for foreign debt, the same as Nigeria.