Tanzania Wants Credit Rating This Year Before Eurobond Sale

Tanzania plans to obtain a credit rating by the end of this year, after repeated delays, before raising $750 million in a debut Eurobond sale in 2014, Finance Ministry Permanent Secretary Servacius Likwelile said.

The East African nation is in the final stages of a risk assessment by Citigroup Inc. and will then approach Standard & Poor’s, Moody’s Investors Service or Fitch Ratings for an assessment of the country’s creditworthiness, Likwelile said in an interview yesterday in the commercial hub, Dar es Salaam. The country has been discussing plans to obtain a credit rating and tap the Eurobond market since at least 2008.

“We are keen that the credit rating will be complete before the end of the year,” Likwelile said. “We are now looking for a rating agency.”

Tanzania ranks as Africa’s fourth-biggest gold producer and together with bordering Mozambique has natural-gas reserves that could supply the global market for a decade. The country is selling sovereign debt to help finance infrastructure projects, including a gas pipeline from the southern Mtwara region to Dar es Salaam.

“We plan to invest heavily in energy, road construction, water supply development and airport construction,” Likwelile said.

The shilling gained for the first time in three days, advancing 0.1 percent to 1,608 per dollar by 4:49 p.m. in Dar es Salaam. The currency has depreciated 1.4 percent this year.

East Africa

Rwanda became the first East African nation to sell Eurobonds when it raised $400 million in an offering in April. The debt yielded 6.875 percent. Kenya, Tanzania’s neighbor that ranks as East Africa’s biggest economy, plans to sell as much as $2 billion of Eurobonds by January, Finance Minister Henry Rotich said last week.

Tanzania’s economy is forecast to grow 7 percent this year, compared with 6.9 percent in 2012, according to the International Monetary Fund. Annual inflation is projected to slow to 7 percent in 2013 from 12.1 percent last year, according to the IMF’s website.

The government is reviewing proposals from lenders for a $700 million syndicated loan to finance infrastructure development, Likwelile said in September. The government budgeted 1.2 trillion shillings ($746 million) of external, non-concessional borrowing in its spending plans for the current year through June 2014 to fund the budget deficit. It plans to trim the shortfall to 5 percent of gross domestic product in 2013-14 from an estimated 5.8 percent a year earlier.

Yesterday, the Bank of Tanzania sold a debut 15-year Treasury bond in an offering that attracted offers that were more than double the 15 billion shillings for sale. The securities yielded 16.6492 percent, according to the Bank of Tanzania.

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