African countries and corporates are showing growing interest in tapping international capital markets to fund expansion, ratings agency Moody’s Investors Service said.
At least 12 potential issues worth between $6-8 billion are in the pipeline. Other than Kenya, Ivory Coast, Nigeria and Angola, four sub-Saharan countries and four banks are also looking to raise money on global markets, the agency said.
“There is beginning to be experience in tapping bond markets as opposed to exclusively relying on bank credit,” said Kristin Lindow, a senior Moody’s vice president.
Although the global financial crisis is arguably past its peak, banks are still relatively tight on credit, she said while on a visit to the Kenyan capital.
Kenya delayed plans to issue its first sovereign Eurobond of $500 million as the global crisis bit. The money was intended for infrastructure and energy projects.
“One of the factors driving interest in Africa is the need for infrastructure expansion … In a number of countries, investment needs of the country are driving them to look beyond the domestic capital market and into the global capital market.”
African economies were growing quite rapidly before the global crisis but were constrained by inadequate infrastructure.
Ghana and Gabon in 2007 became the first African countries outside South Africa to issue Eurobonds.
Moody’s does not have much presence in sub Saharan Africa, Lindow said, with ratings only in South Africa and Botswana.
However, more African countries were willing to throw their books open for scrutiny.
“First there was no company or no bank in the countries that was ready to go out and issue in the global capital markets and governments themselves weren’t necessarily at the stage where they were willing to be transparent enough about their finances,” she said.
“That is part of the change that is taking place … there seems to be an advantage to being transparent.”
Tanzania had suspended a push for a debt rating last year, saying ratings were partly to blame for the financial crisis.