Why does Namibia have a deficit and why would they sell a $500M USD-based bond? Probably because the bankers needed something to help pay their bonuses. Meanwhile they are about to embark on a journey of perpetual debt.
Leaders of Africa, read "Confessions of an Economic Hitman" and speak with leaders of Argentina, Iceland, Ireland, and Greece before you go any further.
This is driven by predatory capitalism.
Namibia Said to Sell Debut Eurobond to Fund Budget Deficit
Namibia is selling a debut $500
million international bond to help finance its budget deficit,
according to three people familiar with the transaction.
The 10-year dollar-denominated securities are being sold to
investors in Europe and the U.S., said an official from the
central bank, who declined to be identified because the sale
hasn’t been completed. The bond may be priced to yield between
5.75 percent and 6 percent, according to an investor and banker,
who declined to be identified for the same reason.
Namibia, the world’s biggest miner of offshore diamonds and
the fourth-largest producer of uranium, has a credit rating of
BBB- from Fitch Ratings and Baa3 from Moody’s, the lowest
investment-grade levels. The southern African nation, which
borders South Africa, Botswana and Angola, follows Nigeria, sub-
Saharan Africa’s second-largest economy, which sold its first
dollar-denominated debt in January.
“It sounds relatively attractive compared to African
peers,” Stuart Culverhouse, the chief economist at investment
bank Exotix Ltd., said in a phone interview from London today.
“It’s a relatively unknown name and may have to stimulate
interest through the pricing.”
Bids received for the bond exceeded the amount on offer by
six times, according to the investor. Barclays Capital and
Standard Bank Group Ltd. are selling the bond on behalf of the
government, according to the banker.
Budget Deficit
The government is raising funds to help finance a budget
deficit that’s forecast to widen to 9.8 percent of gross
domestic product in the year through March 2012 from 7 percent
last year.
Namibia has a higher credit rating than sovereign debt
issued by sub-Saharan African nations, excluding South Africa.
Gabon’s dollar-denominated bonds due 2017 yielded 5.117 percent
today, while Ghana’s $750 million of 8.5 percent international
bonds due 2017 yielded 6.152 percent. Nigeria’s $500 million
Eurobonds due 2021 yield 5.965 percent, according to data
compiled by Bloomberg, at 3:52 p.m. in London.
Namibia has “a similar rating to South Africa and
obviously very closely tied to the South African economy,” said
Culverhouse. “If you look at it from that perspective it’s
about 200 basis points over the equivalent South African
Eurobond. From both sides of the argument, it’s a fairly
attractive deal.”
Kenya, Angola, Zambia and Rwanda are also planning to tap
international debt markets to finance rail, power and other
infrastructure projects.
To contact the reporters on this story:
Chris Kay in Abuja at
ckay5@bloomberg.net;
Nasreen Seria in Johannesburg at
nseria@bloomberg.net
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