Zambia going for $2b fresh debt funding from Eurobonds

(Bloomberg) – Zambia is preparing to raise as much as $2 billion in Eurobonds and may start marketing the debt next month, said Oliver Saasa, a consultant who said he was briefed about the plan by a senior Finance Ministry official.

The southern African nation may start meeting investors over the planned sale in the first week of July, said Saasa, the chief executive officer of Lusaka-based Premier Consult Ltd. and a director at Stanbic Bank Zambia Ltd.

Finance Minister Alexander Chikwanda said on Tuesday that the country will borrow externally to fund an “unfinanced” budget gap of 10.5 billion kwacha ($1.4 billion) after a decline in copper prices hit revenue. Chikwanda said he’s requesting that lawmakers approve an increase in the overseas debt ceiling to 60 billion kwacha from 35 billion kwacha.

The country is Africa’s biggest copper producer after the Democratic Republic of Congo. The government has raised $1.75 billion in two separate dollar-bond sales since 2012.

Officials at the Finance Ministry and Bank of Zambia didn’t answer their mobile phones when Bloomberg called seeking comment outside normal business hours on Tuesday.

Zambia’s finance ministry last week raised its budget deficit projection to 6 percent of economic output from 4.6 percent, after the government reversed a proposed mining-tax increase. The country’s dollar bonds have declined as the fiscal outlook worsened, pushing yields on debt due April 2024 to 7.82 percent on Tuesday from 7.12 percent at the start of the year.

The kwacha added 0.2 percent to 7.385 per dollar at 7:41 a.m. in Lusaka, the capital, paring the drop this year to 7.1 percent.

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