By Carolyn Cohn
December 2, 2010 9:00 PM EST
Mozambique is considering a debut international bond issue and is looking at setting up a sovereign wealth fund to conserve expanding mineral wealth, a central bank official said on Thursday.
Mozambique has a domestic bond market with maturities up to five years but may follow other sub-Saharan African countries in issuing an international bond, Antonio de Abreu, a board member of the country's central bank told Reuters in an interview.
"International bonds are something of which we are very aware, what we want to do is to learn from other experiences like those of Ghana," de Abreu said, speaking on the sidelines of a Mozambique investment forum in London.
"It is something which is under consideration, there is no specific target date."
Ghana issued a debut dollar bond totalling $750 million in 2007 which has been trading at record low yields below 6 percent, and countries such as Nigeria are also planning debut issues.
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Mozambique is rated B+ by Standard & Poor's and B by Fitch.
One of Africa's poorest countries, Mozambique is heavily dependent on trade with its giant neighbour South Africa but there have been significant hydrocarbon finds recently, attracting interest from foreign oil companies.
U.S. oil and gas firm Anadarko Petroleum this week announced a major gas strike in the southern African country, its third discovery this year.
Several sub-Saharan African countries, including Nigeria and Ghana, are planning to set up sovereign wealth funds in an attempt to conserve energy wealth for future generations.
De Abreu said Mozambique's central bank had been taking advice from the World Bank on setting up such a fund.
"It's something which we are addressing with a certain urgency, natural resources are now in fashion."
Many African countries have suffered from the loss of oil wealth through squandering and corruption and are hoping a sovereign wealth fund will help them to avoid such mistakes in future.
INFLATION CHALLENGE
Mozambique's economy is forecast to grow by at least 7.2 percent this year and by 7.5 percent next year, de Abreu earlier told the Mozambique conference, organised by Developing Markets Associates and Africa Matters.
However, inflation is running above 15 percent, hurt by a weakening metical currency and the removal of price controls, de Abreu said.
"The main goal for the government is to maintain inflation at a single digit. Inflation in 2010 has been a challenge for us."
The metical has fallen nearly 20 percent this year and the country is running a current account deficit.
Riots broke out in September following a 30 percent rise in bread prices. De Abreu, however, said he expected the metical to stabilise following efforts by the central bank to support the interbank foreign exchange market and a rise in interest rates.
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