Kenya is planning a $300 million bond, encouraged by its B+ rating from Standard & Poor’s and growth of 7.1% in first half of 2007, finance minister Amos Kimunya told bankers yesterday. Details and advisory mandates have yet to be finalised, but the Kenyans’ decision to follow Ghana into the market is expected to initiate one of several “beauty contests” between arrangers, as more sub-Saharan borrowers look to tap the markets.
Angola is also expected to seek a big new financing from international capital markets, while Gabon’s Paul Tongui is in town discussing proposals for the buy-back of Paris Club official debt. Economy, Finance, Budget and Privatisation Minister Tongui, who has virtually completed Gabon’s London Club restructuring has been fêted by bankers this week as he works out a strategy to cope with outstanding Paris Club debt repayments, “which is posing a few problems”.
Gabon received a 15% haircut from the Paris Club – although main creditor France is giving 20% – having demanded 30% in a deal that becomes applicable on December 2. The Paris Club forgiveness is worth $350 million. Libreville still has payments of CFA1,600 billion ($2.186 billion) to make, having already paid creditors CFA1, 200 billion for some CFA326 billion-worth of official debt raised mainly in the 1980s.
The Central Africa oil producer is seen as a relatively attractive credit risk by fixed income investors who are still flooding into Africa, and Gabon is expected to seek and obtain a commercial solution to retire its most extensive debt.
The market is excited by Ghana’s $750 million eurobond – which, a US official observed yesterday, was four times oversubscribed – and banks are chasing sub-Saharan opportunities as never before.
The US official cautioned that Treasury “wants to avoid a return to the lend-and-forgive cycle”, and investors must work within IMF/World Bank debt sustainability criteria.
Big money is also pouring into sub-Saharan infrastructure. Chukwuma Soludo yesterday presented the new Africa Finance Corporation to potential partners and clients. The Lagos-based investment bank, promoted by the Central Bank of Nigeria, has $2 billion authorised share capital Soludo announced that AFC had already raised $1.5 billion, so “the train has left the station”.