By SYLVESTER MWALE –
ZAMBIA’S  US$1.25 million Eurobond has rippled the global market, attracting more than 170 investors from across Europe and the United States of America (USA).
This development ends unfounded speculation by some local political critics that the Government has channeled the funds for political purposes.
Some local political party leaders have been misleading the public by speculating that the Government is channeling the Eurobond to prepare the Patriotic Front (PF) for the 2016 general elections.

. Yamba

However, according to a statement by Secretary to the Treasury Fredson Yamba issued in Lusaka yesterday, the Eurobond, which has attracted 175 investors, was ushered on the global market on July 30, 2015.
In terms of geographical distribution, the USA took the highest share at 48 per cent followed by the United Kingdom (UK) at 42 per cent.
The rest of Europe covered nine per cent and other regions got one per cent.
By investor type, fund managers took 84 per cent, insurance and pension funds four per cent, banks/private banks three per cent while hedge funds closed at nine per cent.
The statement by Mr Yamba states:
“The repayment of the $1.25 billion Eurobond will be made in three equal installments of $416.7 million in July 2025, July 2026 and July 2027.
“The choice of amortising the bond in three equal installments is to reduce the gravity on the Government in amortising the $750 million, $1 billion and the $1.25 billion bonds.”
Mr Yamba said the Eurobond would be used to finance various infrastructure projects being undertaken by the Government in various parts of the country.
He said this was consistent with the Government policy of prudent fiscal and debt management.
Mr Yamba said that to ensure proper utilisation of the funds, the Ministry of Finance would work with implementing ministries to ensure value for money through improved implementation and monitoring of projects.
He said the use of the Eurobond would in the short-term result in higher growth, thereby increasing the country’s ability to service the debt.
“It is worth noting that despite the strong interest from investors, the Government only issued $1.25 billion from the entire order book of $2.5 billion,” Mr Yamba said.
“This was premised on the need for the Government to subscribe only to those resources that were needed to finance the various infrastructure projects that the Government is undertaking across the country, in the transport, energy and social sectors.”
He said the Government was mindful of the need to maintain debt sustainability and improve upon Zambia’s credit-rating.
In this regard, the Government factored the new borrowing into its estimates and came to a credible conclusion that it was still sustainable by all major debt thresholds.
The process of establishing a sinking fund has also reached an advanced stage and the Government will start setting resources aside for this purpose from 2016 onwards.