HARARE, March 2 (The Source) – The Infrastructure Development Bank of Zimbabwe (IDBZ) says it intends to float more bonds to raise financing for its housing development projects but at a lower yield rate in line with current interest rates.
The state owned institution was this year given the green light to issue up to $100 million worth of bonds on the local market, over a five-year period, for investment into the housing sector. It is currently working on numerous low to medium cost housing developments throughout the country, in response to an acute housing backlog estimated at 1,5 million units.
Resource mobilisation executive Willing Zvirevo on Thursday told reporters that IDBZ would be coming into the market more frequently to raise funding for its various projects which are at different stages of preparation.
“With our first bond we came to the market at a time when the interest rates were at their peak so we priced it at 9,5 percent, then we pegged the second one at 8.5 percent. So for the next batch we are looking at about 8 percent and it will gradually go down,” Zvirevo said.
The central bank in 2015 directed banks to lower interest rates, which had been as high as 30 percent to between 6 and 18 percent per annum, depending on the borrower’s risk profile.
“In terms of tenure those instruments are usually 5-year paper, basically to align them with cashflows that we are going to generate from those housing projects.”
He added that the bonds will most likely be privately placed with pension funds and insurance firms depending on the size of the issue.
Last year, IDBZ floated its maiden housing bond of $5 million to finance its Marimba housing development in Harare which has since been completed and handed over to beneficiaries. The bank is currently in the market to raise $5,8 million for another housing development in Hwange.