Cape Town, South Africa — ESI-AFRICA.COM. — 24 November 2010 – South African power utility Eskom is among the increasing number of African nations and state-owned firms that are expected to tap international bond markets in the next few years, helped by investors’ hunger for emerging market debt and marking an upswing in fees for Africa-focused banks.
Eskom and Zambia are just two expected applicants in 2011, Angola, Tanzania, and Uganda also have dollar-bond plans in the pipeline, while Kenya is seriously considering an issuance if domestic yields rise, a senior Treasury official told Reuters.
Eskom has said it will tap U.S. and European bond markets as part of a plan to raise up to US$6.9 billion (R48.3 billion) over the next three years, while Zambia, Africa’s largest copper producer, has said it plans to issue a US$500 million (R3.5 billion) overseas bond.
“I am convinced we will see substantial issuance from Africa over the next two, three years,” said Florian von Hartig, global head of debt capital markets at South Africa’s Standard Bank.
“The sovereigns will take the lead, but financial institutions and corporates “’ maybe from Nigeria, maybe from Ghana, maybe from Angola or Kenya, will follow suit,” he said in an interview on the sidelines of a capital markets conference here.
With interest rates in the developed world hovering close to zero, investors are ploughing into emerging market debt for higher returns. The yield on Ghana’s 10-year Eurobond maturing in 2017 is around 6%, while a similar bond from Gabon is offering 5.2%.