Prof Ndulu |
Tanzania is waiting for credit rating anytime from now prior
to the issuance of a Eurobond of between 700 and 1,000 million US dollars to
finance infrastructure projects, mainly roads.
Bank of Tanzania (BoT) Governor Prof Benno Ndulu said in Dar
es Salaam that the consultant—Citigroup—was now arranging for the rating from
two out of three renown credit rating agencies in the world.
“I can’t name the rating firms but what I can say is that
we’ll be rated by two firms out of three reputable in the world,” Prof Ndulu, a
one time World Bank Director, said.
The big three credit rating agencies are Standard &
Poor's (S&P), Moody's, and Fitch Group.S&P and Moody's are US-based while Fitch is
dual-headquartered in New York City and London, and is controlled by the
France-based FIMALAC.
Professor Ndulu’s clarification follows international
media report that the country has shelved her plan to launch the Eurobond and
instead issued a 600 million US dollars international bond—under private
placement. The placement was arranged by Standard Bank—locally known as Stanbic
Bank.
“I don’t know what comparison they (critics) are using to
gauge our interest rates that are expensive,” Prof Ndulu said yesterday.
He
said the country’s rate of 600 basic points plus Libor totalled to 6.46 per
cent per year was the best compared to other Africa’s Eurobonds terms of
between seven and eight per cent. A 100bp equals 1 per cent.
The country private placement was
received by international critics who said the bond failed to trade relatively
good as the country is not rated terming it as a disaster and cheap.
The bond,
according to global money analysts, was priced at 600bp over Libor, meaning
that Tanzania ended up paying up to 200bp more.
The amount was high compared to issue liquid fixed-rate
five-year bullet transaction based on where peers like Zambia and Ghana are
trading.
Tanzania has swatted international capital market critics saying its
600 million US dollars bond under private placement was not an about-turn to
issue a debut Eurobond as these are two separate issuances.
According to the BoT, the 600 million US dollars
international bond was budgeted in this government fiscal year. On February 26,
the country entered in the international capital market placing 600 million US
dollar seven-year private placement that was arranged by Standard Bank.
Source: The Daily News, www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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