IDBZ raises $22m from infrastructure bonds

Source: IDBZ raises $22m from infrastructure bonds – DailyNews Live 8 January 2017

HARARE – The Infrastructure Development Bank of Zimbabwe (IDBZ) last year
raised about $22 million from infrastructure bonds floated to the
investing public to fund various projects under preparation, the bank

Data released by the State- owned institution – whose mandate is
infrastructure development – to local media indicated that insurance
companies and pension funds had been main subscribers snapping up the
infrastructure bonds which attract an interest of nine percent per year.

The bonds – aimed at providing capital for the upgrading of Zimbabwe’s
power generation plants and housing facilities – come after the bank
issued its maiden $5 million housing bond in 2015 through private
placement and an additional $15 million bond during this second half of

“The bank will be issuing additional tranches of the housing bond of up to
$15 million in 2016 to fund various projects currently under preparation
once they are ready for implementation,” the group said in a stakeholder
update released recently.

IDBZ also said it had received the thumbs up from Treasury to issue bonds
worth over $100 million in the next five years.

“The bank has authority from the ministry of Finance to issue housing
bonds of up to $100 million over a five-year period and the bond issuances
will be underpinned by bankable projects that demonstrate off take
capacity and financial viability,” the bank said.

IDBZ’s $5 million bond issued in 2015 was fully subscribed, and has a
five-year tenor carrying a fixed coupon of 9,5 percent per annum. Proceeds
of this bond are financing development of two housing projects; New
Marimba Park in Harare and Clipsham Views in Masvingo, where servicing is
in progress.

The projects collectively deliver 1 042 serviced residential stands and
the instrument has had one coupon payment settled in June. IDBZ is
presently developing 338 high-to-medium density residential stands under
its New Marimba housing project. It is estimated the exercise will cost
plus or minus $2 million.

Both the 300sqm stands and 510sqm stands, for which deposits ranged from
$2 500 and $4 400, would be paid for over a period of 10 years and the
cost will attract interest of 10 percent per year.

The project is part of IDBZ’s contribution towards closing the country’s
over 1,5 million housing backlog. IDBZ recently came up with a draft
housing policy to its guide sector interventions aimed at easing housing
shortage in the next two years.

The draft policy outlines plans to acquire land for housing development
and funding mechanisms for the delivery of affordable units.