East Africa Nations Plan at Least $800 Million Bond Sales
Rwanda and Kenya plan to raise a combined $800 million to finance spending on infrastructure that will boost their economies, joining Uganda and Tanzania as they consider selling Eurobonds.
Rwanda plans to sell $300 million of Eurobonds in its first global debt offering next year, Finance Minister John Rwangombwa said in an interview yesterday in Arusha, Tanzania, where he is attending the African Development Bank’s annual meeting. Kenya, which has the region’s biggest economy, may sell a sovereign bond of a minimum of $500 million in about a year’s time to help repay debt and finance infrastructure, Finance Minister Robinson Githae said in a separate interview.
“Some banks have asked us to consider doing it earlier, but our target is still 2013,” Rwangombwa said.
African countries including Angola, Tanzania and Zambia are considering turning to global capital markets to fund projects. Rwanda, which makes most of its foreign currency from tourism and coffee exports, wants to finance spending on power plants and roads, Rwangombwa said in May 2011. Kenya in April revived plans to sell more than $500 million of Eurobonds, which will be used to repay a syndicated loan.
“We are working on documentation for the bond and will press the button when we are ready,” Githae said. “We, however, target between now and one year’s time.”
Standard & Poor’s credit assessment for Kenya is B+, the company’s fourth-highest non-investment-grade level, with Rwanda rated one step lower at B.
Nigeria, Ghana Yields
Nigeria, Africa’s biggest oil producer whose rating matches Kenya and Uganda’s at S&P, sold $500 million of 6.75 percent Eurobonds in January last year. The yield on the debt, which matures in 2021, has fallen 35 basis points, or 0.35 percentage point, to 5.797 percent this year.
Yields on Ghana’s $750 million Eurobonds due 2017, rated the same as Rwanda at S&P, have declined 55 basis points this year to 6.076 percent.
“Kenya might attract more interest because it’s a country that’s better known than Rwanda and there’s more international interest in their local currency market, obviously in their equity market, so it would be more familiar,” Stuart Culverhouse, chief economist at investment bank Exotix Ltd., said by phone from London today. “On both counts there would be interest and the terms would be relatively favorable.”
Uganda, where Tullow Oil Plc (TLW) and its partners have found 2.5 billion barrels of crude, plans to sell its first dollar- denominated debt in the next two to three years to finance “massive” projects, Deputy Treasury Secretary Keith Muhakanizi said in an interview on May 29.
Tanzania plans to get a credit rating and sell its first Eurobond in 12 months, central bank Governor Benno Ndulu said today. The government has appointed Citigroup Inc. as an advisor, which told the country it should issue at least $500 million, he said.
The planned sales “will also encourage further issuance and serve as a benchmark for other issuance in the region,” Olivier Vojetta, the London-based head of research at FM Capital Partners Ltd., said in an e-mailed reply to questions.
Growth in Rwanda, which is rebuilding its economy after a genocide in 1994 that left 800,000 people dead, is forecast to slow to 7.7 percent this year from 8.6 percent in 2011, the Finance Ministry said on May 21.
Kenya lowered its 2012 economic growth forecast to 3.5 percent to 4.5 percent on May 15, from a previous projection of 5.2 percent, citing the possibility of lower foreign investment before elections next year and higher oil prices.
“Rwanda is also likely to be well received as the economy has performed well relative to regional peers since the civil war in the country ended,” said Vojetta. “Of course, ongoing security crisis in parts of Democratic Republic of Congo has potential negative effect on Rwanda.”
Fighting in eastern Congo has displaced almost 100,000 people since last month, with 9,000 having taken refuge in Rwanda, the United Nations said May 23. Congo’s army is battling a renegade group of soldiers in the region who have links to General Bosco Ntaganda, who is wanted for war crimes by the International Criminal Court.
Kenya’s shilling snapped two days of declines against the dollar, rising 0.6 percent to 86.20 by 6:03 p.m. in Nairobi, the capital. Rwanda’s franc was unchanged at 609.3 per dollar.
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