Zambia’s Ministry of Finance is raising a new $250 million syndicated loan as more African countries, including Tanzania, turn to the loan market for financing, bankers said on Wednesday, according to Reuters, the World’s biggest news agency.
Zambia’s loan, its first in nearly 30 years, is being arranged by Standard Chartered and Citigroup and is expected to sign this month with a group of local and international lenders, the bankers said.
Syndicated loans for African sovereign borrowers have been rare. Kenya re-opened the market in August 2012 with a $600 million two-year loan.
The new $250 million loan is Zambia’s first syndicated facility since 1984, one of the bankers said.
Tanzania has also sent out a request for a loan of between $200 million-$700 million, the bankers said.
“The Government of Kenya opened the floodgates last year with its loan. Now there are a number of discussions going on with African countries including Tanzania,” the second banker said.
Tanzania’s Ministry of Finance was not immediately available to comment. Zambia’s Ministry of Finance was not available to comment.
Zambia initially considered raising money in the bond market, but opted to approach banks for a loan after recent bond market volatility, the bankers said.
“If the bond market doesn’t open soon there will be more demand for these (sovereign) loans,” a second banker said.
Kenya’s $600 million two-year syndicated loan was a bridge loan to the bond market. The bond has however been delayed due to the Kenyan elections.
“A bond is still on the horizon but not expected to be done until early next year,” the first banker said.