Was manic day in the markets yesterday. But amid the chaos #Tanzania strolled quietly away from global debt mkts, having dipped their toes for 7 years. So now 20, not 21, African countries in the eurobond mkt. Story as 6* thread
As far back as 2008 Tz was seeking credit ratings & was anticipation might be issuing a eurobond. Most expected standard eurobond (eg 10 year maturity with fixed coupon, the norm then) but Tz decided to do own thing
Hired only Standard Bank & in Feb-13 made private placement of floating rate notes (LIBOR +600bpts). $600mn issued, 7-year life. Amortizing along way (9 semi-annual installments) so ave life was 5 years.
Was it a eurobond? Foreign currency ✔️ traded a bit in 2nd’ry markets ✔️. Floating rate, rare but ok for eurobond ✔️. Was not listed though✖️(so it lacked liquidity). Issued in Euro-Dollar mkt. On balance could be called a eurobond
Were critics as issuance who expected vanilla eurobond. Said Tz paid more than should. Shortly after issuance yield settled at c 5.5% (vs Rwanda $400mn 23s 10-year eurobond = c 7%). In Aug-17 when both bonds had $400nm outstanding, diff narrowed to c 40bpts
One reason for non-vanilla option / private placement route was Tz did not have a credit rating at time. It got a debut B1 from Moody’s in Mar-18. Since 2013 numerous rumors of more standard eurobond coming, but Tz never returned to mkts
Recently signed $1.46 billion loan from Standard Chartered for railways, while peers borrowed from China. Suggesting Tz might keep doing their own thing...
reuters.com/article/us-tan…
reuters.com/article/us-tan…
