Tinashe Makichi Business Reporter
CBZ Holdings is set to issue a record US$200 million Diaspora bond in April to be guaranteed by the African Export and Import Bank to replace the current US$68 million bond which expires the same month.The current US$68 million three-year Diaspora bond was issued in 2011 by the bank as a way of speeding up economic recovery. It was floated on the Cayman Stock Exchange. It is set to expire in April this year, prompting the bank to renew the bond by issuing another US$200 million bond.
The bond was arranged and guaranteed by Afreximbank with proceeds expected to be used in infrastructure investment and development.
Speaking at an analyst briefing in Harare yesterday CBZ group chief executive Dr John Mangudya said the development showed the
country’s capital markets could begin to open up.
“The renewal of the bond is an important step in Zimbabwe’s recovery from the hyperinflation period to the current environment characterised by a liquidity crisis. This is a positive step towards opening new platforms for investment either local or international,” he said.
He said he now prefers to call it a bond rather than a Diaspora bond since very few Diasporans subscribed to the current one. The bond will be at a common rate of plus or minus 7 percent compared to the current rate at 8,5 percent.
Dr Mangudya said once the bond is secured, on-lending margins will be around plus or minus 10 percent.
“This rate enables the organisation to achieve return, pay for guarantee fees for Afreximbank among other administrative costs,” he said.
Dr Mangudya said CBZ has also established a global fund team based in Mauritius that is going to play a role of mobilising funds for the bank.
“The global fund has been approved and managers have already been appointed to do the job and we are glad that the move came at the same time as the renewal of the bond,” Dr Mangudya said.
CBZ welcomed the decision by the Government to promote inter-banking and the issue of lender of last resort. Dr Mangudya said the financial sector has failed to realise its full potential due to the absence of inter-banking systems.
“It is quite surprising that the local banking sector has managed to survive by operating without inter-bank systems for five years.”
He said the companies remain hopeful for an improved working environment which is conducive to sustainable investment.
CBZ is looking for long lasting solutions to the funding challenges and resuscitation of the manufacturing sector which remains a priority for the economy to register positive growth.
The group has since 2009 sourced lines of credit worth US$289,67 million. In terms of the financial performance, Finance director Mr Never Nyemudzo said the group managed to achieve a solid performance under a constrained environment.
“The Memorandum of Understanding restricted bank revenue initiatives while performance was hampered by tight market wide liquidity conditions,” said Mr Nyemudzo.
As a result total income had registered a marginal growth of 4,4 percent to US$150,5 million while there was an 18,4 percent dip in the bottom line to US$36,7 million. Earnings were down 14,75 percent to US6,3c per share.
In terms of income contribution; net interest income was on 63 percent, non interest income at 32 percent while underwriting income contributed 5 percent.
Mr Nyemudzo said the group had managed to maintain net interest income levels despite the MoU effects.