Tunisia to return to bond market after US guarantees
Tunisia, the first country to rise up against its leader in the "Arab Spring", has secured debt guarantees from the U.S. government that will allow it to tap the international bond markets this year for the first time since 2007, Reuters reports.
Source : https://www.marocafrik.com/english/Tunisia-to-retu...
A finance ministry official said on Wednesday that the U.S.-guaranteed bond could raise $400-500 million. It will follow a $500 million issue of five-year Tunisian treasury bonds directly to Qatar at an interest rate of just 2.5 percent.
Chaker Soltani, the ministry's director general in charge of debt, told a news conference that the U.S. guarantees would allow Tunisia to borrow on the international markets at far lower rates than its risk profile would normally allow.
If it were to tap the international markets alone, Tunisia would currently expect to pay an interest rate of 3-4 percent over LIBOR, Soltani said, referring to rates at which banks lend to each other.
With the U.S. guarantees it expects to borrow at a much-reduced rate of about 0.5 percent over LIBOR - currently around 0.5 percent for three-month dollar loans.
Such a rate should help Tunisia's finances recover from revolutionary turmoil that has hit economic growth and pushed up public spending.
The United States has guaranteed loans to Middle East countries before. In 2002, it gave Israel a package of guarantees to help the economy cope with a recession caused by a global downturn and a wave of violence.
Israel has not issued bonds using U.S. loan guarantees in several years since its credit ratings have since improved and it can tap global markets using its own credit worthiness.
The U.S. guarantees to Israel came with a number of conditions, such as meeting fiscal targets. But Soltani said the Tunisian loans came with no such strings.The treasury bond issue direct to Qatar would come in April. The U.S.-guaranteed issue would likely come in August or September to cover maturing debt, he told Reuters.
A government official speaking on condition of anonymity on Tuesday had told Reuters that U.S.-guaranteed bonds worth up to $650 million could be issued as early as May or June.
Soltani said the Tunisian government also hoped to venture into the growing market of Islamic bonds, or sukuk, but did not expect to make an issue of this debt this year as the legal framework to support it was not yet in place.
Chaker Soltani, the ministry's director general in charge of debt, told a news conference that the U.S. guarantees would allow Tunisia to borrow on the international markets at far lower rates than its risk profile would normally allow.
If it were to tap the international markets alone, Tunisia would currently expect to pay an interest rate of 3-4 percent over LIBOR, Soltani said, referring to rates at which banks lend to each other.
With the U.S. guarantees it expects to borrow at a much-reduced rate of about 0.5 percent over LIBOR - currently around 0.5 percent for three-month dollar loans.
Such a rate should help Tunisia's finances recover from revolutionary turmoil that has hit economic growth and pushed up public spending.
The United States has guaranteed loans to Middle East countries before. In 2002, it gave Israel a package of guarantees to help the economy cope with a recession caused by a global downturn and a wave of violence.
Israel has not issued bonds using U.S. loan guarantees in several years since its credit ratings have since improved and it can tap global markets using its own credit worthiness.
The U.S. guarantees to Israel came with a number of conditions, such as meeting fiscal targets. But Soltani said the Tunisian loans came with no such strings.The treasury bond issue direct to Qatar would come in April. The U.S.-guaranteed issue would likely come in August or September to cover maturing debt, he told Reuters.
A government official speaking on condition of anonymity on Tuesday had told Reuters that U.S.-guaranteed bonds worth up to $650 million could be issued as early as May or June.
Soltani said the Tunisian government also hoped to venture into the growing market of Islamic bonds, or sukuk, but did not expect to make an issue of this debt this year as the legal framework to support it was not yet in place.
Source : https://www.marocafrik.com/english/Tunisia-to-retu...