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Zambia to issue third Eurobond despite rating downgrade: report

Xinhua, July 4, 2015 Adjust font size:

Zambia was on course in acquiring another Eurobond despite reports that yields on the other two bonds have fallen after a credit-rating downgrade by international ratings agency Standard & Poor's, the Zambia Daily Mail reported on Friday.

On Wednesday, Standard & Poor's lowered Zambia's long-term sovereign credit rating due to the widening budget deficit to "B" from "B+" but affirmed its "B" short-term rating, casting doubt over the government's plans to sell the third Eurobond.

But Deputy Minister of Commerce, Trade and Industry Miles Sampa said the government was making headways in efforts to acquire another Eurobond to help build the country's electricity generation capacity.

"As you are aware, we are currently facing power cuts, it is because Zesco (power utility) needs to invest a lot of millions of dollars so it can generate more power, and to generate power, Zesco has to bring water from Kafue and all the rivers, process it and then give us electricity," he was quoted as saying by the paper.

"But that requires a lot of money. This is why the minister of finance has gone and is making headway to acquire another Eurobond so that we can develop Zesco and hence have reliable power in the country," he added.

Reports indicate that the government was preparing to raise as much as 2 billion U.S. dollars in the new Eurobonds it intends to issue.

Zambia borrowed 750 million dollars in 2012 and 1 billion dollars in 2014 from the international market to finance infrastructure development projects. The two loans are supposed to be paid in 2022 and 2024.

According to reports, yields on Zambia's 1 billion dollar bond decreased after Standard & Poor's downgraded the country's credit rating to "B". Endi