Bondmania

From Zambian Economist Mon Jan 7 2013, 13:30:00

The success of the $750m Eurobond is leading to various public sector bodies to consider more bond debt to finance various infrastructure.

ZESCO has been on the road looking to acquire $2 billion debt to fund new investments. The company sent managers to the U.K. and the U.S. in a bid to raise the money from investors. South Africa's Standard Bank Group Ltd is advising the company, which has meet investors in London, Boston and New York. According to Mr Chitundu (ZESCO CEO) the company may also sell a Eurobond similar to the $750 million raised by the government in September 2012, "We are probably talking $1 billion, probably even $2 billion".

Lusaka City Council (LCC) is pressing ahead with the $500m municipal bond proposal. It has called for the expression of interest for a book runner and legal advisor. The appointment will be made in February. When the money is raised, it will be used for construction of 3,500 high rise housing units. In the case of LCC, a municipal bond when bought is equivalent to offering a loan to the local council that promises to pay back at maturity and pays interests at set amounts annual / semi-annual. In truth to call these "bonds" is simply a matter of custom, these really are "debentures" (unsecured promises to pay). The local councils cannot pledge public assets as security but can pledge certain revenues.

That is where the problem starts with our councils. Future revenue is not guaranteed for many reasons including corruption, mismanagement and general failure by tenants to pay back debts. So we can expect, this new LCC bond to be guaranteed by Government in some way. Government will eventually bailout Lusaka City Council due to rampant fiscal irresponsibility. This issue therefore goes beyond LCC. ...

[view whole blog post ]
 See More    |     Report Abuse


You might also be interested in the following news stories:

Africa:   Church Disaster Tests SA-Nigeria Ties (analysis)
Institute for Security Studies
30 September 2014

South Africa and Nigeria have to work together for many continental initiatives to really take off: by all accounts, it is one of the most important relationships to take Africa forward. [read more]

South Africa:   New Moves in Judiciary (news)
SAnews.gov.za
30 September 2014

The transfer of the functions, personnel and the necessary resources from the Department of Justice to the Office of the Chief Justice, will go a long way towards enhancing the institutional ... [read more]

Afrique du Sud:   Scandale Thales - la pression s'accroît sur le président Jacob Zuma (news)
Radio France Internationale
29 September 2014

En Afrique du Sud, ce week-end, un journal sud-africain a publié de nouveaux détails mettant en cause le chef de l'Etat dans une affaire de corruption qui date d'un peu plus d'une ... [read more]



blogAfrica is allAfrica.com's platform to help you keep an ear on the African blogosphere. We draw diverse voices from around the world who post regularly and insightfully about African issues. Bloggers, submit your blog's rss-feed!