The Infrastructure Development Bank is planning to start listing its bonds on the Financial Securities Exchange, an alternative trading platform, during the first quarter of next year.
The IDBZ plans to start listing the energy bonds issued in 2014, followed by the housing bonds recently issued through a private placement, IDBZ resource mobilization manager Willing Zvirevo told Business Weekly in an interview yesterday.
The listing of the bonds means investors may not hold the debt instrument to maturity.
“The plan is to list the bonds by way of introduction by end of first quarter next year,” said Zvirevo.
“It will become easier for investors to sell when the debt securities are listed and will not have to necessarily wait until maturity. By listing, the instruments will become more tradable.
“This will also provide an opportunity to potential investors who would have missed out when the bond was issued as they can buy from the current holders,” Zvirevo added.
He said the bank had already engaged advisors who were working on pre-listing prospectus before the official application can be made to Finsec.
IDBZ is already on the market raising $14,8 million for the Kariba Housing Development Project through a private placement. It is also raising $5,8 million for Empumalanga West in Hwange and $12,1 million for Sumben Housing Project in Mt Pleasant, Harare.
When bonds are placed privately, they are typically offered to a limited number of investors.
Investors in privately placed bonds usually include large banks, pension funds, or insurance firms.
Offering bonds in a private placement may reduce the number of investors that can be reached, but potential investors will likely be more familiar with the workings of the securities markets.
Zvirevo said bonds for Kariba and Sumben will be listed, adding that the bank was working on the prospectus to issue the instrument to the public prior to the listing.
The bank successfully raised $50 million to finance the expansion of Kariba South Power Station and repowering of Harare Power Station. Prior to that, the bank had also raised $45 million to finance Zesa’s pre-paid metering project through issuance of debt instruments.
The $45 million was issued in two phases; the first being the $30 million, which has already matured and paid out. The second was the $15 million bond, to be listed on the Finsec.
Last year, the Securities Exchange Commission of Zimbabwe licensed Finsec to operate the first alternative trading platform, a move meant to diversify capital markets.
The licensing followed the gazetting of the Alternative Trading Platform rules through Statutory Instrument 100 of 2016, which mandates SecZim to licence companies to operate alternative trading platforms.
Currently, Old Mutual, the country’s largest insurer is the only entity whose stock is traded on the alternative platform