Tanzania finalises credit rating talks, says minister

DAR ES SALAAM: Tanzania has concluded talks with Fitch Ratings for a sovereign credit rating and is finalising similar discussions with Moody’s Investors Service, paving the way for a possible debut Eurobond debt issue, the Finance minister said on Saturday.

Saada Salum told Reuters east Africa’s second-biggest economy would decide when to issue the Eurobond after the ratings were secured, without going into further details.

Tanzania’s government previously said it planned to borrow as much as $1 billion through a sovereign Eurobond to fund infrastructure projects.

Tanzania, like its neighbour Kenya, wants to capitalise on a long coastline and upgrade existing rickety railways and roads to serve growing economies in the land-locked heart of Africa from Uganda on its north border to Malawi in the south.

“We concluded talks with Fitch for a credit rating this week and are now finalising our discussions with Moody’s,” Salum told Reuters, adding that she hoped to sign agreements with both agencies by next month.

The minister said the Government had sealed a $200 million loan from the China Development Bank and was seeking another $600 million from the Johannesburg-based Rand Merchant Bank, which is expected to boost the local shilling currency.

HARD CURRENCY

Foreign loans and grants are a major source of hard currency in the largest of the East African countries.

“We signed an agreement with the China Development Bank... on Tuesday. We are also in discussions with investors for a loan from the Rand Merchant Bank,” Salum said.

She said the Tanzanian shilling, which has been battered by a strong dollar and declining gold exports, was expected to stabilise in the second half of 2015. Tanzania - Africa’s fourth-largest gold producer after South Africa, Ghana and Mali - has also been hit by delays in aid disbursements from donors over corruption allegations in the energy sector.

“The Government is implementing a package of measures to ensure the Tanzanian shilling stabilises,” she said. “These measures include boosting exports through high manufacturing output, tightening liquidity on the shilling and raising Central Bank’s foreign exchange sales.”