Ethiopia, which has initiated a number of construction and energy projects, including the Grand Renaissance Dam project, will now be looking to sovereign bonds to support the projects for the first time in history. This is after the responsibility to issue the bond was discussed by the House of Peoples’ Representatives (HPR) and the latter gave minister of Finance and Economic Development (MoFED)the go ahead.
This move also comes after the country was rated at B+ (credit rating) by Moody’s, S&P and Fitch on May this year.
The 10-year bond announced on December 1 this year is expected to yield 6.625% to 6.75%. The interest rates mentioned by sources are six to seven percent interest rates for a maturity period of 10 years. The minister of Finance and Economic Development (MoFED) Ahmed Shide has already been quoted as saying “the interest rate that the bond got was quite reasonable.”
Ethiopia is also expected to market the bond in various countries including UK and US. Already, a high level delegation led by the Finance minister Sufian Ahmed and governor of the National Bank of Ethiopia (NBE) have travelled to Europe to market the bond. The delegation was expected in the US this week.
Redwan Hussein, head of Government Communication Affairs Office said last month that the foreign currency will be spent on mega government projects that were experiencing shortage of hard currency.
The country already requires 80 billion birr in order to complete the 5,250-megawatt Grand Ethiopian Renaissance Dam on the Blue Nile River and the bond will be helpful towards raising the funds, according to Communications Minister Bereket Simon. Ethiopia is also planning to construct another dam on river Gebba, and Ethiopia Roads Authority has also planned for a road construction/expansion worth US$ 1.5bn under 43 road construction projects.