UPDATE 1-Zambia plans investor meetings ahead of Eurobond return

Tue Mar 25, 2014 5:54am EDT

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(Adds roadshow details, background)

By Davide Scigliuzzo

LONDON, March 25 (IFR) - The Republic of Zambia will meet fixed-income investors in the US and the UK starting on March 27 ahead of its potential return to the Eurobond market.

The sovereign, rated B+/B by S&P and Fitch, has hired Barclays and Deutsche Bank to manage the potential offering.

Meetings will take place in Los Angeles on March 27, San Francisco on March 28, Boston on March 31, New York on April 1 and 2, and London on April 3 and 4.

Bank of Zambia governor Michael Gondwe will be among the officials attending the roadshow.

Zambia issued its inaugural Eurobond in September 2012, raising USD750m through a 10-year note that priced at a yield of 5.625% after attracting orders of USD12bn. The deal was issued in the middle of a bull market for emerging bond markets following the US Federal Reserve's announcement of a third round of quantitative easing.

The yield on those notes, however, has widened significantly since last May thanks to rising Treasury rates as the Fed reins in its bond purchases, growing concerns over Zambia's widening fiscal deficit and a slide in the price of copper, one of the country's main exports.

The notes were bid at a cash price of 82.405 to yield 8.31% as of 09:06 GMT on Tuesday, according to Tradeweb.

As a result, Zambia will probably have to pay 8.50-9.00% if it was to issue a new 10-year bond, according to a banker away from the deal.

" have lost a lot of money on Zambia," he said.

No tenor or deal size has been set yet. (Reporting by Davide Scigliuzzo and Sudip Roy; Editing by Anil Mayre)

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