Zambia’s debut 10-year 500million dollars Euro-bond has been assigned a B plus rating by both S and P and Fitch earlier today.
The bond is expected to be issued anytime from today after marketing road shows took place this week in both London and the US.
according to Reuters In assigning the rating, Fitch cited Zambia’s political stability, combined with a decade of growth above 6 percent thanks to a stable macroeconomic environment and policy reforms.
The country’s vibrant copper mining sector and overall fiscal discipline were also mentioned as key strengths.
On its part S and P highlighted Zambia’s promising investment and economic growth trends, a fairly strong external balance sheet, and moderate general government debt.
Going forward though, risks remain and explain the negative outlook placed on the rating.
On its part, Fitch cited the risks posed by a potential failure to curb current expenditure, particularly on wages, which consume 43percent of government revenue; while S and P mentioned the increased economic policy uncertainty since the new administration took office.
Most eyes will be on whether the yield on the Euro-bond will come in line with Ghana, also rated B plus.
Reuters who have cited analysts mentioned the yield could come in the 5.5 percent-7.5 percent range, so at premium with Ghana’s 8.5 percent 2017 dollar-denominated Euro-bond, currently at around 4.75 percent.
They have stated that the yield is likely to come at premium to Ghana’s, because of Zambia’s current high vulnerability to slowing China, a key market for its copper exports.