Zimbabwe Plans Bond Market for Debt From Government to Companies

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By Bloomberg on November 4, 2013. No Comments

The Zimbabwe Stock Exchange, with a benchmark gauge that’s rallied 38 percent this year, is looking to set up a bond market in the first half of 2014 to start trading in government and corporate issues.

“We are still in the investigative stage,” Chief Executive Officer Alban Chirume said by phone from the capital, Harare, today. “There are some elements which have to be looked into before this happens.”

The southern African nation is trying to boost investing as it recovers from a decade-long recession that ended in 2009. Volumes on the ZSE Industrial Index increased 5 percent in the third quarter from a year earlier as buyers speculated President Robert Mugabe will put in place policies to accelerate growth after winning a July election.

Zimbabwe failed last year in its first attempt to sell Treasury bills since 2008, with all bids for the 91-day securities rejected by the central bank. The country needs debt sales to take place for the exchange to go ahead, Chirume said.

“There is the element of secondary trading, it’s something which has to be looked at,” he said. “We are looking at government, quasi-government and corporates bonds.”

With countries including Zambia and Kenya planning to offer more assets including bonds and derivatives, Zimbabwean debt sales and a market to trade the issues is “long overdue,” said Nhlahla Mpofu, an economist at investment group 4Cast Research.

“Since our inflation is steady right now, this is the time to issue the bonds,” he said by phone from Bulawayo, Zimbabwe’s second-biggest city. Inflation slowed to 0.9 percent in September from 1.3 percent in August.