Govt issues $2 billion Eurobond

Amos Chanda

GOVERNMENT will issue a 10-year Eurobond of as much as $2 billion to fund a widening budget deficit, Special assistant to the president for press and public relations Amos Chanda has told Reuters.

Mr Chanda said the Eurobond to be issued today will be between $1.5 billion and $2 billion and the maturing date is 10 years.

Zambia’s budget deficit is expected to swell to 20 billion kwacha ($2.64 billion) by the end of 2015 from an initial forecast of 8.5 billion kwacha.

This will be the third Eurobond issued by Africa’s No.2 copper producer. Previous forays into the international capital markets were a debut $750 million bond in 2012 and a $1 billion bond last year.

Government has stated a preference for external borrowing rather than domestic because it was cheaper, but with the U.S. Federal Reserve looking likely to raise interests by the end of the year the costs of servicing debt will rise.

Zambia’s external debt currently stands at $4.8 billion, about 18.5 percent of gross domestic product. The domestic debt burden is $3.7 billion, about 14.2 percent of GDP, finance minister Alexander Chikwanda said in June.

Reuters.