Tanzania May Raise Up to $2 Billion in Eurobond Sale

Tanzania may sell as much as $2 billion of Eurobonds after obtaining its first sovereign credit rating by the end of September, Deputy Finance Minister Janet Mbene said.

“We could go up to $2 billion,” Mbene said in an interview yesterday in the Kenyan capital, Nairobi, where she was attending a meeting of the African Trade Insurance Agency. “Going by investor confidence, we are able to raise a significant amount of money.”

Tanzania plans to use proceeds from international bond sales to build roads, boost power generation and refurbish the nation’s railways as it strives to reach middle-income status by 2025. The country’s offering of $600 million of 7-year securities to selected investors in March was four times oversubscribed. It sold the debt at 600 basis points, or 6 percentage points, above the London Interbank Offered Rate, which stood at 0.2740 percent today.

The country enlisted Citigroup Inc. to help prepare it for a long-term debt rating from one or two credit companies before issuing its maiden Eurobond. “We expect to get the rating by the end of September,” Mbene said

Sub-Saharan African nations outside South Africa plan to offer at least $7 billion of sovereign debt this year, more than in the past five years combined.

Nigeria, sub-Saharan Africa’s largest oil producer, plans to sell $1 billion of Eurobonds to finance power projects after meetings with international investors in June. Kenya, East Africa’s largest economy, expects to issue sovereign bonds by September, raising as much as $1 billion. Angola plans to sell $2 billion this year after a $1 billion private sale in 2012.

Rwandan Offering

Rwanda, whose economy is growing at an annual pace of more than 7 percent almost two decades after a genocide in the country killed about 800,000 people, raised $400 million in a debut Eurobond last month, at a 6.875 percent yield.

The yield on Ghana’s dollar bonds due October 2017 fell 1 basis points to 4.91 percent today. Rates on Nigeria’s 6.75 percent debt due January 2021 rose 3 basis points to 4.20 percent.

Tanzania is Africa’s fourth-biggest producer of gold with African Barrick Gold Plc accounting for most output. The country has also confirmed 40.8 trillion cubic feet of natural gas reserves. Economic growth is forecast to accelerate to 6.8 percent this year from 6.5 percent in 2012, according to the International Monetary Fund.

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