- May 19, 2023
- Posted by: admin
- Categories: Current News, debt management
In an effort to build regional capacity on the issuance of international sovereign bonds, MEFMI in collaboration with the World Bank conducted a regional workshop on International Sovereign Bonds Issuance from 27 to 31 March 2023, in Nairobi, Kenya.
The workshop was officially opened by Mr. Musa Kathanje, the Director of Macroeconomic and Fiscal Affairs at the National Treasury of Kenya. Speaking on behalf of the Permanent Secretary to the Treasury, Mr. Kathanje commended MEFMI and World Bank for conducting the workshop as it addressed the capacity needs within the region. He noted that there is limited in-country knowledge and expertise for managing international sovereign bond issuance transactions. He also highlighted the need for governments to be clear about the use of funds prior to the issuance to avoid situations where resources are utilised for non-productive programmes or projects.
Driven by low global interest rates and portfolio diversification strategies in mature markets, the last decade and a half has witnessed an increase in Eurobond issues. In the MEFMI region, seven countries have issued Eurobonds. These are Namibia, Angola, Zambia, Tanzania, Rwanda, Kenya, and Mozambique, with some having accessed the capital markets more than once. Some MEFMI countries outside these seven are contemplating their own debut issuances.
Access to the international capital markets has provided an impetus for growth in most developing countries by providing a sizeable amount of resources to support the huge developmental needs they are faced with. However, it has also increased the risks of public debt portfolios due to the volatility of Eurobond markets, characterised by the variation of spreads by several hundred basis points within short periods in reaction to local or global events. The outlook is gloomy as global interest rates are returning to historical levels, thus, refinancing risk could become severe, particularly for countries with macroeconomic imbalances.
The workshop comprised presentations based on the World Bank’s Guidance Note on International Sovereign Bonds developed in 2019. The presentations expounded on the six-step process, as outlined in the Guidance Note, namely, (i) The Pre-phase, (ii) Selecting Advisors and Executors, (iii) Documentation, (iv) Investor Communication and Relations, (v) Execution, and (vi) The After Issuance Phase. The presentations were complemented by exercises as well as plenary discussions where participants exhibited high levels of engagement, sharing country experiences, and asking critical questions.
The workshop enhanced the knowledge and skills of officials on the requisites and processes for the issuance of international sovereign bonds. A total of 29 participants drawn from central banks and ministries of finance of 11 MEFMI member countries namely, Botswana, Eswatini, Kenya, Lesotho, Malawi, Namibia, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe, attended the workshop. Of the total participants, 20 (69%) were female.