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IFC Issues Debut Zambian Local Currency "Zambezi Bond"
A man displays a 50,000 Kwacha note in Lusaka January 23, 2012. PHOTO BY REUTERS/Mackson Wasamunu.
20/09/2013
JOHANNESBURG (Reuters) - The World Bank's private sector arm, the International Finance Corporation, issued its first Zambian local currency bond on Thursday, raising 150 million kwacha at a yield of 15 percent.
The four-year bond, the first by a nonresident issuer in Zambia's domestic capital market, was nearly five times oversubscribed, with demand from Zambian pension funds, international and domestic asset managers, insurance companies and banks, the IFC said.
Proceeds from the issue, dubbed the "Zambezi" bond, will be used to support Zambia's capital markets and increase access to local currency finance for the private sector.
"The IFC Zambezi bond supports the efforts of the government and authorities to deepen domestic capital markets in Zambia," said Oumar Seydi, IFC director for eastern and southern Africa.
"Such markets are an important source of local-currency funding, in line with IFC's strategy for broader private sector development through micro, small and medium enterprises and other essential economic sectors."
The bond is the first under the IFC's 2.5 billion kwacha local currency bond programme, approved by Zambian regulators in July, allowing the organisation to issue bonds regularly when the need for financing arises.
Standard Bank and Stockbrokers Zambia Ltd. are joint lead arrangers for the programme.
IFC, whose local currency bonds are rated triple-A by Moody's and Standard & Poor's, issued a debut 12 billion naira bond in Nigeria in February. The 5-year instrument, nicknamed the "Naija" bond, was sold at a yield of 10.2 percent.
The organisation has since obtained approval for $1 billion local currency bond programmes in Nigeria and Ghana.
It also plans to issue debt in Botswana, Kenya, Namibia, Rwanda, South Africa, Uganda and Zambia under its pan-African domestic medium-term note programme launched in May 2012.
The Zambian bond could pave the way for other international issuers to launch similar instruments in the future, the IFC said.
"We envisage that you would actually see some other international issuers coming to the market," said Andrew Cross, IFC's head of treasury client solutions for Africa, Latin America and Caribbean.
"In Nigeria, (the Naija bond) generated an awful lot of interest from other offshore issuers that are just now working through the process."
Future kwacha-denominated bonds issued by foreign institutions will also be known as Zambezi bonds, Cross said, similar to kangaroo bonds in Australia or maple bonds in Canada.
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