Legal Framework for Eurobond Issue to be finalised

The government is finalising legal procedures before floating the long awaited Eurobond between April and May this year, says Finance Minister Saada Salum. The Eurobond process in Tanzania was originally launched in 2008, but was postponed due to the global financial crisis and launched again in 2012 with the intention of issuing the Eurobond during the 2012/13 financial year. However, in Salum’s own words “we needed to put our house in order before floating the Eurobond to avoid mistakes done by other sub Saharan countries.”

Saada Salum now says that international lawyers have teamed up with local experts to work on the final details of legal and other procedural requirements before floating the Eurobond, aimed at securing funds for long term infrastructure projects and other investments. After several years of delays to secure a credit rating, the minister revealed that the government is engaging three major international sovereign rating agencies – Fitch, Standard & Poors and Moodys. Some analysts predict a somewhat similar score to the country’s southern neighbour, Mozambique, rated at B+ by Standard & Poors.

Central to the infrastructure upgrades is a desire to unlock and connect critical but remote key production areas and markets to the more urbanised and accessible areas of the country. Implementing these initiatives will see the building of improved railways, road networks, ports and power projects. Needless to say, poor and unreliable infrastructure networks in the country have increased the cost of doing business. On a visit to London last week Deputy Minister for Trade and Industry, Janet Mbene (“Mbene”), shared her views with a small group of investors which chimed closely with the above. Mbene called for investors to see the opportunities in infrastructure, and in particular to public-private-partnerships (“PPPs”). Mbene said that railways, airports and ports are key infrastructure priorities for the government. Investors seemed excited by the invitation but wary, and we would say rightly so, about the financing and commitment the government will bring to the table.

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