The Democratic Republic of Congo (DRC) wants to make its international bond foray the first of many, its Finance Minister told Reuters, as the country rides the current metals market boom and improved ties with the United States (US).
Mineral-rich DRC, which remains blighted by internal conflict with rebel forces, is the latest African country looking to capitalise on surging demand for smaller and riskier emerging economies’ debt.
“The priority for us is going into the international capital market, not just to raise funds, but to build a curve, for the private sector to raise also money and to come and invest in the country,” Finance Minister Doudou Fwamba Likunde told Reuters in London where he was meeting investors.
The exact timing of the debut international bond, expected to be $750 million in size, was still to be determined, Likunde said. It was flagged last month by the central bank governor for around April.
“It’s up to the condition of the market, when the time is coming, we’re going to be ready,” Likunde said.
FUNDS FOR ROAD AND HYDROPOWER PROJECTS
Selling an international bond has been DRC officials’ ambition for years but seemed elusive amid the country’s brutal conflicts and concerns about human rights and corruption.
Likunde said proceeds of the bond would be used to finance a number of large-scale projects, including modernising the international N’djili airport and roads in the capital Kinshasa, as well as hydropower plants and rural infrastructure.
Market conditions that have left emerging market bond yield spreads, or risk premiums, at their lowest since the 2007-08 global financial crisis, have allowed governments to sell a record amount of debt year-to-date.
DRC would be following the likes of Suriname, Laos and its neighbour, the Republic of Congo, who have all sold debt in recent months.
S&P Global Ratings put DRC’s credit rating of B- on a “positive outlook” earlier this year. However, analysts say Kinshasa may have to pay double-digit interest rates for the bond issuance.
The country’s external debt burden is one of the lowest in so-called frontier bond markets, at 18.5% of gorss domestic product with 95% of it borrowed on concessional terms.
“We are going to keep communicating, telling our own story,” Likunde said, adding he hoped to see more ratings upgrades.
PUSH TO SECURE ACCESS TO CRITICAL MINERALS
Likunde also provided an update on plans for the high-profile US-backed Lobito Corridor railway which will connect the copper, cobalt and lithium belts of DRC, Angola and Zambia to the Atlantic coast.
The corridor – which forms a key part of Washington’s push to secure access to Africa’s critical minerals and counter China’s dominance, was discussed when DRC Ministers travelled to the US last week to a meeting alongside over 50 countries.
“We’ve been working with Development Finance Corporation (DFC), they have released a commitment of $530 million of a direct loan to a private company that is going to be in charge of operating this project,” Likunde said, referring to the US International DFC.
Likunde said the company receiving the financing would be chosen through a tender process.
–Reuters–
