Maravi

Zambia to get sovereign credit rating by June

Zambia to get sovereign credit rating by June
By Chiwoyu Sinyangwe
Fri 22 Jan. 2010, 04:00 CAT

ZAMBIA is to become sovereign credit rated by June this year as the recovering global economy makes it ripe for the country to get a rating that will lower the cost of borrowing international funds for huge capital projects.

Bank of Zambia (BoZ) stated that the rating process was underway since the global economy started showing signs of recovery and the process was briefly derailed by the festive period.

Sovereign credit rating is an assessment by which countries and their economies could be globally compared using similar methodologies that provide lenders and other investors with a consistent globally understood evaluation and willingness of the government to meet its debt obligations in full and on time.

Giving an update on the process shelved last year at the height of the global economic crisis, BoZ stated that when the crisis set in, the country had already advanced to the level of appointing United States based financial giant, JP Morgan as transaction advisors.

“It didn’t make sense to continue the process during the crisis when there was a lot of uncertainty,” BoZ stated.

“But now the crisis is over and we have now reopened the process…it was only the Christmas and New Year which got in the way of obtaining signatures to the contract. Once JP Morgan comes on board, it doesn’t take long to appoint a rating agency that will rate us and this we are hopeful can be done before the end of the first half of the year.”

BoZ stated that sovereign credit rating would aid the country to borrow huge capital from international financial institutions at a lower rate.

The Central Bank stated that sovereign credit rating would be crucial in sourcing finance for huge capital mega projects like power stations at a lower interest rate.

“We need this sovereign credit rating because if we are going to get our corporate entities borrowing money from abroad like we are talking about borrowing money for Kafue Gorge II Kafue Gorge Lower hydropower station, with credit rating, we are likely to have at least capital which is less expensive,” stated BoZ.

“But more important also is the fact that currently the economic situation is quite favourable and probably it’s the best time we can present ourselves for a rating if we are to get ourselves a reasonable rating.”

Labels: BOZ, CREDIT FACILITIES

posted by MrK @ 6:45 PM