Africa has shown renewed interest in raising financing for infrastructure projects through Eurobonds and infrastructure bonds.

The shift to international and domestic capital markets is also expected to draw interest from international contractors keen to expand their market share of work in the region.

Angola, Kenya, Rwanda, Tanzania, Uganda, and Mozambique all plan to issue Eurobonds in the coming months to bridge their infrastructure budget deficits.

In addition, the African Development Bank (AfDB) said in September it will float a $40-billion infrastructure bond to fund infrastructure expansion in Africa. The bond targets an estimated $450 billion of reserves held by Africa's central banks abroad.Analysts have estimated the continent's  annual infrastructure development and maintenance budget at $93 billion.

New infrastructure requires $60 billion while maintenance budget is estimated at $33 billion. Kenya, Zambia, Ghana and Ethiopia are already funding several transport, energy, water and ICT projects with proceeds from bond sales.

In Zambia a 10-year, $750-million Eurobond issued in September received bids worth $11.9 billion, 15 times over-subscription.

“This works out at 24 times over and above the intended $500 million and is not only the largest order book for sub-Saharan Africa but also at 5.375% the lowest coupon, meaning the most favorable price,” said Zambia’s Finance minister Alexander Bwalya Chikwanda in September.

Kenya also raised $435 million between September 2011 and February this year through 12-year infrastructure bonds with a yield of 16.64% to finance energy, transport and water projects.

“The bonds have set the pace for public, private as well as supranational agencies to tap the market for long-term funding through bond issuance,” he said. Infrastructure increases the capacity for future growth, so debt could be used to construct these vital projects,” said Central Bank Governor Njuguna Ndung’u in October.

International construction firms are keen on bond-backed financing. “If the bonds are backed with an appropriate security such as natural resources or appropriate multilateral support…they could be an important instrument to help to bridge the financing  gap,” says ays Diana Neumüller-Klein, a spokesperson at Strabag SE, the German construction firm involved in Africa’s infrastructure sector for more than 25 years.