Zambia to secure a credit rating in March

Zambia, Africa’s largest copper producer may secure a credit rating by March this year to enable the Southern African nation attract more portfolio investors into the country and develop infrastructure.


The ascendance of Zambia to a credit rate status will undoubtedly push it forward and enable it to start issuing various international bonds as much as USD 1 billion to undertake infrastructure development and accelerate economic growth.


Mr Situmbeko Musokotwane finance minister of Zambia said that government may next month receive a final report on the country’s sovereign credit rating and enable it undertake various development programs through issuance of international bonds and other programs.


Mr Musokotwane said that Government will soon obtain a rating from Standard and Poor’s rating agency after which it will undertake various programs intended to accelerate the sixth national development plan launched recent by president Rupiah banda in which the country needs to mobilize USD 26 billion between the period 2011 to 2015.


He said that we are very near in receiving the rating and I don’t think it should take more than a month. Government concluded talks with S&P on the possibility of Zambia having a sovereign credit rating in December last year.


Recently, Mr Caleb Fundanga governor of Bank of Zambia said that discussions were concluded last December after Government appointed two rating agencies Fitch Ratings and S&P rating agencies to provide an independent and prospective credit opinion on Zambia. Government also appointed JP Morgan as transaction advisers. A team from the rating agency came to Zambia and held fruitful deliberations with both Government and the BoZ officials last year.


Last December government stated that it was preparing to accredit for sovereign credit rating and enable the country raise funds for rail and energy projects from the sale of its first ever international bond to the tune of USD 1 billion. Once admitted to the sovereign credit rating, Zambia intends to sell its first international bond and raise USD 1 billion for rail and energy projects as economic growth accelerates.


Mr Musokotwane had told reporters that the Government had started the process of acquiring the sovereign credit rating before it could issue out its first international bond. A team of experts was at the time evaluating the economic investment potential, political risks and the future of the economy. The credit rating will indicate the risk level and is used by investors intending to invest abroad, taking into account the political risk. It was the government’s vision that Zambia was expected to have a higher credit rating once the procedure is completed.


He said that we are now in the final stages of completing the procedures and we want to tap into the international capital markets to help finance the building of power plants and railway as economic growth accelerates. Zambia will be part of the African countries such as Kenya, Ghana and Angola that wish to raise finance for rail and power projects from international capital markets.


He added that Zambia abandoned the plan to seek credit rating and sell a bond abroad in 2008 after the global financial crisis sparked a sell-off of emerging market assets. A bond is a debt investment in which an investor loans a certain amount of money, for a certain amount of time to an entity at a certain interest. Zambia had by the third quarter last year hoped to have its first sovereign credit rating before proceeding with the bond sale soon after.


(Filed by Mr Mathew Nyaungwa SteelGuru Correspondent Zimbabwe)

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