Ethiopia said on Friday it had completed raising $1 billion with its debut Eurobond with a term of 10 years and coupon of 6.625 per cent, adding that the offer had been oversubscribed.

eurobond
eurobond

Ethiopia is the latest African sovereign to receive a strong response on its first foray into the international debt markets. Investors have been eyeing Africa’s sturdy growth rates and Ethiopia’s economy is now expanding by about 9 per cent a year.

“Ethiopia attracted high quality investor interest despite a challenging market environment,” the Finance Ministry said in a statement, adding the 10-year maturity aimed to create a benchmark and proceeds would be invested in infrastructure.

Deutsche Bank and JP Morgan were the lead managers. The ministry said a French firm had acted as financial adviser but did not name the company.

Despite strong growth rates, analysts said Ethiopia had limited hard currency earnings, making its debt-servicing capacity weaker than some African states. It will also be more difficult for Ethiopia to build foreign reserves, which now cover little more than two months of imports, they said.

Kenya, Ethiopia’s southern neighbour which issued its debut Eurobond earlier this year, has reserves to cover around four months of imports

Source Reuters

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