IFC Issues Second Zambezi Bond to Support Zambia’s Capital Markets
Washington D.C., August 24, 2023 — The International Finance Corporation (IFC) has announced the issuance of a 193.2 million Zambian kwacha bond, equivalent to around $10 million, aimed at bolstering the development of Zambia’s domestic capital markets and enhancing access to local currency finance. The issuance marks IFC’s second kwacha-denominated bond, underlining its commitment to supporting Zambia’s economic growth.
The newly introduced five-year “Zambezi” bond, characterized as an amortizing floating rate note, garnered remarkable investor interest, resulting in oversubscription. This bond pays a coupon based on the 182-day Zambian Treasury bill yield minus 50 basis points, signifying an attractive opportunity for investors.
The proceeds from the issuance will be channeled into IFC’s local currency investment initiative in Zambia, reinforcing the organization’s efforts to boost local currency financing within the country. This marks a significant step towards creating a robust foundation for essential sectors within the Zambian economy.
Notably, this issuance holds historical significance as IFC’s inaugural floating rate note in Zambian kwacha. It forms part of IFC’s registered Medium Term Note program in Zambia and the Pan-African Domestic Medium-Term Note Program (PADMTN), which highlights IFC’s intentions to potentially explore further issuances in the currency to fund investment projects in Zambia.
John Gandolfo, IFC Vice President and Treasurer, Treasury & Mobilization, highlighted the importance of well-established domestic capital markets, stating, “Deep and liquid domestic capital markets are essential to expanding access to much-needed local currency finance for key sectors in the economy. Scaling up local currency financing is a key priority for IFC and we’re delighted to be back in the Zambian market.”
The bond issuance was arranged by Absa Bank Zambia, with First National Bank (FNB) Zambia Limited participating as the co-arranger. The success of this bond issuance is not only indicative of the issuing entity’s credit quality, but it also underscores the private sector’s pivotal role in advancing capital markets and driving economic growth in Zambia.
Jason Quinn, Absa Group Chief Financial Officer, emphasized, “The successful bond issuance is a testament to the credit quality of the issuing entity, IFC. This transaction also demonstrates the critical role that the private sector plays in helping the country’s capital markets and driving economic growth.”
Bydon Longwe, CEO of FNB Zambia, highlighted their readiness to collaborate with IFC to extend crucial access to finance, fostering business growth within Zambia and beyond. He stated, “Leveraging on our international expertise, FNB is aptly poised to complement IFC’s work to extend key access to finance that will accelerate business growth in the country and across borders.”
IFC, a member of the World Bank Group, has a remarkable track record of issuing bonds in various currencies, including those from emerging markets, often pioneering borrowing in these markets. IFC’s efforts in Zambia are concentrated on promoting sustainable private sector development by enhancing the investment climate, supporting small businesses, and actively participating in the growth of strategic sectors like infrastructure, agribusiness, and financial services.
In the fiscal year 2023, IFC has committed an unprecedented $43.7 billion to private companies and financial institutions in developing nations, utilizing the strength of the private sector to address extreme poverty and drive shared prosperity amidst the challenges posed by compounding global crises.
