IDBZ to list $65m bonds

HARARE - The Infrastructure Development Bank of Zimbabwe (IDBZ) is set to make history by becoming the first company to list its $65 million bonds, earmarked for addressing energy challenges, on the local stock exchange.

The bank highlighted that an application would be made to list the bonds, with an eight percent interest rate per annum, on the Zimbabwe Stock Exchange.

“After listing, all secondary market trading of the bonds will be dealt with and settled through the ZSE,” said the IDBZ.

Market experts say the listing of the bonds would make them easier to sell and improve their credibility.

“The trend in international markets such as the New York stock Exchange and Nasdaq is that you can put an offer out there and see what the market is willing to pay, and that is always how it has been done,” said a stockbroker with a local bank.

“People who like to trade bonds and not hold till maturity might find going to a brokerage house a positive. Because that firm will always buy the bonds back from you,” she said.

Due to the absence of cheap external credit lines and the biting liquidity crunch in Zimbabwe, bonds are increasingly being seen as a tool for plugging funding gaps arising from the fiscal pressure.

Zimbabwe has an estimated external debt of $10 billion, thus making it difficult for the southern African country to access cheap loans.

Meanwhile, Desmond Matete, the IDBZ executive director said the financial institution was also planning to issue more bonds over the next 12 months estimated at $200 million to fund a housing development project ($100 million), completion of Tokwe-Murkosi Dam ($50 million), National Railways of Zimbabwe (NRZ) ($25 million) and residential halls for State-owned universities. The bonds are also expected to have a tenure of five years.

Matete noted that while $25 million would not meet the requirements of the State-owned railways firm, the bond would mark the turnaround of the company.

NRZ requires $600 million in the short-term, and $2 billion in the long-term.

Already, IDBZ has successfully raised $50 million for the Zimbabwe Electricity Transmission and Distribution Company’s prepaid metres which officials said is now 90 percent complete after 466 814 prepaid metres were installed.

IDBZ was established in 2005 to mobilise cost-effective local and foreign capital for long-term and high-risk infrastructure development projects after the government struggled to maintain budgetary allocations to the Public Sector Investment programme for the provision and rehabilitation of public infrastructure. Its role also encompasses providing technical assistance, including project planning, to investors and government on key infrastructure projects.

Since its inception, IDBZ has built residential flats/town houses in Harare and Masvingo and established a fibre optic cable linking Mutare and the capital city in partnership with Africom Continental and the National Social Security Authority.

 

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