Namibia, has successfully priced a US$750 million 10 year sovereign bond for placement in the international capital markets.
The 144A/Reg S Eurobond, which is Namibia’s second Eurobond issue, has a coupon of 5.25% per annum and was priced at to yield 5.375%, equal to a spread of 336 basis points over the 10-year US Treasury bond.
The bond is expected to be rated Baa3 by Moody's and BBB- by Fitch. The transaction was preceded by a three day roadshow across the major centres in US and Europe. This was also the first standalone USD sovereign deal from the CEEMEA region in the last three months.
The proceeds of the transaction will be used to increase Namibia’s international reserves, to invest in industrialization activities, to finance infrastructure development (particularly in the power, water, logistics and transport sectors) as well as to fund initiatives in the education sector with the aim of facilitating skills development
The transaction was announced as a benchmark transaction with initial price guidance of 5.75% area on the morning of 22nd October. Due to strong investor appetite, the order book increased to US$3.8 billion before guidance was revised to 5.5% (+/- 1/8%) allowing the issuer to price a US$750m transaction at 5.375%. The transaction priced 37.5 basis points tighter than the Republic’s first transaction in 2011, resulting in a negligible new issue premium. Namibia achieved a broad geographic distribution with US and UK institutions representing approximately 78% of final investor allocations. Investors from continental Europe, the Middle East, Asia and Africa accounted for the remaining 22%.
Barclays, J.P. Morgan and Standard Bank acted as joint lead managers and bookrunners for the Eurobond. Settlement of the notes is expected to occur on 29 October 2015.