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Home / US$750 million Eurobond proceeds to increase foreign reserves
US$750 million Eurobond proceeds to increase foreign reserves
2015-10-26Staff Report 2 Windhoek Proceeds of a US$750 million Eurobond issued by Namibia last week will be used to increase the country’s international reserves, invest in industrialization activities, finance infrastructure development (particularly in the power, water, logistics and transport sectors) and fund initiatives in the education sector with the aim of facilitating skills development. Namibia, acting through Minister of Finance, Calle Schlettwein, successfully priced the US$750 million 10-year sovereign bond for placement in the international capital markets on October 22. The Rule 144A/Reg S Eurobond, which is Namibia’s second Eurobond issue, has a coupon of 5.25 percent per annum and was priced to yield 5.375 percent, equal to a spread of 336 basis points over the 10-year US Treasury bond. The bond is expected to be rated Baa3 by Moody’s and BBB- by Fitch. The transaction was preceded by a three-day roadshow across the major centres in the United States and Europe and represented the first standalone US Dollar sovereign deal from the CEEMEA (Central & Eastern Europe, Middle East and Africa) region in the last 3 months. The transaction was announced as a benchmark with an initial price guidance of 5.75 percent on the morning of October 22. Due to strong investor appetite, the order book increased to US$3.8 billion before guidance was revised to 5.5 percent (+/- 1/8 percent) allowing the issuer to price a US$750 million transaction at 5.375 percent. The transaction priced 37.5 basis points tighter than Namibia’s first transaction in 2011, resulting in a negligible new issue premium. Namibia achieved a broad geographic distribution with US and UK institutions representing approximately 78 percent of final investor allocations. Investors from continental Europe, the Middle East, Asia and Africa accounted for the remaining 22 percent. Barclays, J.P. Morgan and Standard Bank acted as joint lead managers and book runners for the Eurobond. Settlement of the notes is expected to occur on October 29. 2015-10-26Staff Report 2
