Ethiopia plans to sell its first dollar bond as Africa’s fastest-growing economy exploits record demand for the continent’s debt.
Ethiopia picked Deutsche Bank and JPMorgan Chase & Co for fixed-income investor meetings in Europe and the US beginning tomorrow, according to a person familiar with the matter, who asked not to be identified as the information is private.
The proceeds of the sale will be used to fund electricity, railway and sugar-industry projects, Finance Minister Sufian Ahmed said October 8.
The Horn of Africa nation is joining issuers, including Ghana, Kenya, Senegal and Ivory Coast, who sold what Standard Bank says is a record $15 billion (R165 billion) of Eurobonds this year.
Government and corporate issuers are seeking to benefit from investor appetite for higher returns before the Federal Reserve raises interest rates as soon as next year.
“There is an incentive to issue before US rates start to gradually edge up from next year,” Samir Gadio, head of African strategy at Standard Chartered in London, said today by e-mail.
“The market seems to expect that Ethiopia will price among the highest-yielding African sovereigns.”
African government and corporate Eurobonds sales this year beat 2014’s record $14 billion, Standard Bank said on November 13.
Sovereigns accounted for about 71 percent of issuance, according to the Johannesburg-based lender.
The yield on Kenyan dollar bonds due June 2024 was at 5.91 percent today, down from 6.88 percent when it was sold in June.
Zambian dollar bonds returned almost 17 percent this year, while Ghanaian debt earned 9.5 percent, according to the Bloomberg USD Emerging Market Sovereign Bond Index.
Emerging-market assets have benefited from record-low interest rates in developed nations that pushed investors to seek out higher returns elsewhere.
The end of quantitative easing by the Fed and the prospect of its first interest-rate increase since 2006 is drawing some of that money back to the US.
Ethiopia’s planned issue could be assisted by technical factors, such as scarcity, as the Eurobond will be the only tradable asset for international investors wanting exposure to Ethiopia, Standard Chartered’s Gadio said.
Ethiopia is building the continent’s biggest hydropower plant on the Blue Nile River, known as the Grand Ethiopian Renaissance Dam, that will probably increase electricity supply five-fold by 2020.
Ethiopia may need to invest about $50 billion in infrastructure over the next five years, of which $10 billion to $15 billion may come from foreign investors, the finance minister said last month.
Source: Bloomberg – Business, Financial & Economic News, Stock Quotes.
- Citi to Deutsche Bank on charm offensive in Africa as banks clamor for bond issuance deals
- Here are seven of Africa’s largest infrastructure projects currently under construction (Photos)
- JPMorgan to remove Nigeria from emerging market bond indexes
- Ethiopia eyes extra 12,000 MW in power projects by 2020: Azeb Asnake, CEO, Ethiopian Electric Power (EEPCo)
- European Investment Bank Plans Africa Expansion Amid Growth
- Africa: Now a major player in emerging markets financial services
- Into Africa: The continent’s Cities of Opportunity – PwC (Video, Presentation, and Report)
- Egypt, Ethiopia and Sudan sign new Grand Renaissance Dam agreement
- Ethiopia Commodity Exchange (ECX) considers adding stock & bond trading
- Here are the eight candidates running for African Development Bank President
- Standard Bank opens Ethiopia office to cater to fast growing economy
- Kenya sovereign debut opens path for Kenyan corporate Eurobonds: JPMorgan
- The Grand Ethiopian Renaissance Dam: The $5B project that could turn Ethiopia into Africa’s water powerhouse
- Ethiopia’s $1.8B Gilgel Gibe III dam project could start power generation by June
- Africa on course for growing debt issuance: Megan McDonald, Global Head of Debt Primary Markets, Standard Bank
- Ethiopia-Egypt trade deals to ease River Nile row
- Why you should care who’s in line to run the African Development Bank
- Ranks of African millionaires swell
- JPMorgan Says Kenya May Be Part of Future Africa Expansion
- South Africa losing buyout allure to fast-growing Sub-Saharan African rivals
- Africans Open Fuller Wallets to the Future
- African local bonds – an untapped opportunity?
- MasterCard and Ecobank partner to accelerate electronic payments adoption in 28 Sub-Saharan African countries
- Shop Africa 2016 (Report & Infographics): Knight Frank
- Aliko Dangote, Africa’s richest man, partners with Blackstone and Carlyle for Africa investments
- Cement is the new oil as Africa’s richest man takes on Lafarge
- Tanzania plans Ethiopia energy imports as 12-nation regional power pool emerges
- 3 reasons things are looking up for African economies: McKinsey & World Economic Forum
- Low debt, light payments add luster to Nigeria’s dollar bonds
- How will US monetary tightening impact African markets?
- M&A activity heats up in Africa as investors bet on growth
- High stakes for high reward? Real estate funds come to Africa
- Ethiopia, Egypt and Sudan sign deal to end Nile dispute
- Sudan, Egypt and Ethiopia reach agreement on use of Nile waters
- African economic growth: The twilight of the resource curse?
- African Markets Guide 2015: Barclays (Report)
- Nigeria gets World Bank guarantee for power plant to boost country’s supply by almost 10%
- Blackstone’s Black Rhino looks at renewable power investments in Ethiopia
- African debt capital markets resilient in face of growth challenges
- Barclays to surrender control of Africa unit with £1.6bn sale