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Minister Chinamasa

Business Reporter
FINANCE and Economic Development Minister Patrick Chinamasa has proposed that any future Government and parastatal bonds be listed on the Zimbabwe Stock Exchange.

State-owned entities and Government can issue bonds and list them on the stock exchange to raise long-term capital for infrastructure projects such as roads and power stations.

Investors lend money to the firms through buying the bonds. Listing the bonds improves the entities’ ability to raise capital because it allows investors to sell the loan to other investors should they wish to.

On the other hand, investors buy Government bonds to receive regular interest payments.

“In order to stimulate the capital markets, I am proposing that all Government and parastatal bonds be listed on the ZSE,” Minister Chinamasa said. “The debt market is an ideal platform for Government to source long-term funding for infrastructural projects.”

Minister Chinamasa said Government, through the Reserve Bank, will facilitate the registration of rating agencies in the country to ensure that the listed bonds were rated.

The ZSE plans to launch a bond market by 2016. A secondary market for bonds will nest liquidity in the credit market. The bond market will also allow investors with a short-term investment duration to participate in bonds with the prospect of exiting before maturity.

Institutional investors with varying liquidity status can trade bonds when necessary. Since 2012, a few companies issued some bonds to raise funds mainly for infrastructure projects.

Some of the bonds issued in Zimbabwe include $20 million bond issued by CBZ Bank to finance infrastructure investment and development at a coupon rate of 6,5 percent while the Infrastructure Development Bank of Zimbabwe issued its maiden bond of $30 million to finance procurement of prepaid metres. Last year, the bank issued bonds worth $65 million for electricity generation and distribution projects.

In 2013, the ZSE issued a $1,5 million bond to fund implementation process of the Automated Trading System project. Other bonds issued were the RBZ’s $20 million for meeting import requirements, Fidelity Life Assurance’s $10 million bond to finance low-cost housing and Bindura Nickel Corporations’ $30 million bond to restart its smelter.