Linklaters has advised the joint lead managers and joint bookrunners on the debut sovereign bond issue by the Federal Democratic Republic of Ethiopia. Ethiopia has taken advantage of record demand for high yielding African debt to raise US$1 billion, the proceeds of which will be used to fund planned government capital expenditure in priority areas including industrial zone development and the development of the sugar and energy industries. The 10-year bonds were priced to yield 6.625 percent.
The deal represents another landmark issuance for the continent, following the $2 billion debt issue from Kenya earlier this year, one the largest ever debut issuances in Africa. Linklaters also advised on this transaction.
Richard O’Callaghan, Capital Markets partner at Linklaters, said: “Frontier-market countries have really ramped up global debt sales this year, taking advantage of investor appetite for higher returns before the Federal Reserve looks potentially to raise interest rates next year.”
Cecil Quillen, US Capital Markets partner, commented: “We saw strong demand for African sovereign paper with Kenya’s debut sovereign bond earlier this year and this deal shows that the desire for exposure to some of the fastest growing markets in Africa hasn’t waned.”
The issue will take bond sales for the frontier portion of the market this year to a record-high $40bn, according to Dealogic data.
Andrew Jones, Head of Linklaters’ Africa Group, noted: “2014 has been a stand out year for capital raisings across all regions in Africa, with high activity levels across equity and debt capital markets, syndicated and term lending and project finance. It has been particularly pleasing to for us, as transaction advisers, to see such a broad range of sources of liquidity being accessed including: trading house lending, Islamic financing alongside ECA and local financing for large scale projects, local/international acquisition financing packages and dual listing solutions.”
The Linklaters team was led by UK Capital Markets partner Richard O’Callaghan and US Capital Markets partner Cecil Quillen and included associates Rob Ludwig, Cate Dean and Burc Ozcelik.
