High Demand For Zambian Eurobond Attracts International Investors

zambia-idc-bonds

Zambian USD 1.25 billion Eurobond issued in July, 2015 has recently experienced high demand in the secondary market, after more than 170 investors in Europe and USA opted to buy the African debt.

The bonds, which were sold at the issuance at a discount making it possible to sell only half of the amount initially offered, were acquired by different financial institutions with fund managers topping the list at 84%, followed by hedge funds totaling 9%, insurance and pension funds 4%, and private banks 3%.

According to the Zambian Secretary to the Treasury, Mr. Fredson Yamba, the strong interest by international investors reflects the success of the third round of Eurobonds issued among uncertainty in the global environment.

Even though the new debt issuance brought some questions on whether Zambia can meet its obligations, all major debt-holders consider that Zambia can meet its obligations and conclude that the African nation is sustainable over time, he added.

Zambia has ordered the repayment of the third Eurobond in three equal installments of USD 416.7 million due to July, 2025-2027 seeking to reduce the payment’s burden since it will also repay the first two Eurobond of USD 750 million issued in 2012 and USD 1 billion from 2014.

According to the Overseas Development Institute (ODI), an independent British research firm on development and humanitarian issues, the growth on Zambian debt goes according with the growth in the region since the Sub Saharan countries have raised their debt sales from USD 6 billion in 2012, to USD 11 billion at the end of 2014.