Zimbabwe on a roadshow to promote its debut US dollar bond sale

Zimbabwe will seek to raise $200m in a debut domestic US dollar bond sale on its stock exchange in Victoria Falls that trades exclusively in foreign currency, says finance minister Mthuli Ncube. 

“We may have it in small tranches, rather than a single big issuance,” Ncube said in an interview from New York, where he is on a roadshow to attract investment into the Southern African nation. “We might put it in $30m tranches of about six issuances.”

Zimbabwe is targeting a yield of 6%-9% on the bonds, he said on Wednesday on Bloomberg Television. Yield-hungry investors in frontier markets are interested in the offering, the minister said.

Earlier in September, Bloomberg reported that the bond sale would be for $100m. In August, Ncube said a debt offering could help meet the cost of a $3.5bn compensation bill the country is facing after it reached an agreement with white farmers evicted from their land two decades ago.

The so-called  Zimbabwe Global Investor Roadshow  has seen Ncube travel to SA and Dubai to court foreign investment. In New York, Ncube will also meet officials from the IMF and the World Bank, ahead of an IMF visit to Zimbabwe expected in October.

The government has been building up a track record of repaying its foreign debt by making token payments to creditors including the Paris Club, Ncube said. The country defaulted on payments to the World Bank, the IMF and other multilateral lenders two decades ago. 

The IMF is expected to make a decision on a new staff-monitored programme for Zimbabwe later in 2021, according to Ncube. The IMF in February 2020 abruptly ended the programme, saying it had “gone off track”.

The Victoria Falls Stock Exchange, also known as VFEX, was launched a year ago and last week signed a pact with the United Arab Emirates to possibly establish a gold exchange. Ncube sees the exchange helping “deal with gold smuggling and arbitrage”, as well as advertising Zimbabwe’s mineral resources. 

A cryptocurrency listing on the VFEX in future is also a possibility.

“We are trying to figure out how to invest in it as an asset class,” he said. The government has no plans to use crypto as a transaction currency, Ncube added.

Bloomberg. More stories like this are available on bloomberg.com