Zambia set to pay more in Eurobond sale

A man displays a 50,000 Kwacha note in Lusaka in this file picture.

A man displays a 50,000 Kwacha note in Lusaka in this file picture.

Published Apr 7, 2014

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London - Zambia, Africa’s second-largest copper producer, is set to pay more to sell its first dollar-denominated Eurobonds since 2012 after the nation’s currency slid 9.6 percent this year.

The country may price the benchmark-sized bonds to yield between 8.75 percent and 8.875 percent, according to a person with knowledge of the offering, who asked not to be identified because they weren’t authorized to speak publicly.

This compares with a coupon rate of 5.375 percent for the $750 million note sold in September 2012.

The landlocked nation said in October it may issue as much as $1 billion of Eurobonds, hiring Deutsche Bank AG and Barclays Plc in January to lead the sale.

Zambia, which has a B+ rating that puts it four levels below investment grade by Standard & Poor’s, increased its benchmark interest rate to a record 12 percent on March 28 from 10.25 percent to stem a slide in the currency.

The kwacha gained 0.4 percent to 6.1322 per dollar by 11:19 a.m. in Lusaka, paring its 2014 drop, the most among 24 African peers tracked by Bloomberg after Ghana’s cedi.

The yield on Zambia’s dollar-denominated debt due September 2022 rose one basis point, or 0.01 percentage point, to 7.8 percent.

It’s dropped 53 basis points from this year’s high reached on March 20.

Six calls made to three phone numbers listed on the Lusaka-based Ministry of Finance’s website went unanswered or didn’t connect. - Bloomberg News

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