Tanzania to issue $500m eurobond
Tanzania has revived its plans to issue its first eurobond, worth $500 million, in 2010 to finance infrastructure projects in east Africa’s second largest economy, Finance Minister Mustafa Mkulo said late on Wednesday.
Tanzania, whose relative macroeconomic stability has made it popular among foreign investors and donors, first announced it would seek a sovereign debt rating in 2008 and had hoped to issue eurobonds by last year.
But it postponed its plan late last year due to the global financial crisis. President Jakaya Kikwete said then the country would review the plan once conditions improved.
“We are in the process of issuing a eurobond. We are working on it as an input to beef up the 2010/11 budget. As far as the government is concerned, this is very important and urgent,” Mkulo told Reuters.
“I can confirm that we need this instrument, that’s why a special (government) committee comprising very senior people is now working on it.”
Mkulo said officials from the Finance Ministry and central Bank of Tanzania had been ordered to fast-track the country’s quest for a sovereign debt rating, necessary before it issues the bond.
“We hope that experts who will come in and conduct the ratings exercise will be satisfied with the conditions in Tanzania and pave the way for the issuance of the bond,” he said.
Ghana and Gabon in 2007 became the first African countries outside South Africa to issue eurobonds. Issuance has since reduced against the backdrop of the credit crunch.
Analysts have said Tanzania needs to reform some sectors of the economy under government control to press ahead with the bond issue.
The country has some restrictions on currency transactions and foreigners cannot invest in Treasury bills and bonds.
Tanzania, among Africa’s top aid recipients per capita, will source 33 percent of its 2009/10 (July-June) budget from external sources in concessional loans and grants.
China gave Tanzania $180 million in concessional loans on January 15 as part of its pledge to provide $10 billion in low-cost lending to Africa over the next three years.