Govt issues K5.2bn of Covid-19 bond

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Fredson Yamba.

BUUMBA CHIMBULU writes

GOVERNMENT has so far issued K5.2 billion from the K8 billion Covid-19 bond which was approved by Cabinet on Monday last week.

The K5.2 billion has been issued through the Bank of Zambia (BoZ).

The K8 billion Covid-19 bond will be an additional intervention from the April central bank stimulus package and May benchmark interest rate cut to boost growth. 

The Covid-19 bond resources will be available to support the small and medium enterprises that will not be able to access the K10 billion medium term refinancing facility managed by the BoZ through commercial banks, says Secretary to the Treasury, Fredson Yamba.

“The Bond will be denominated in the Zambian Kwacha. This Bond will have the same features as regular bonds that the Bank of Zambia issues. It is being issued at a discount and will attract coupon payments just like the regular bonds. 

“The only difference is that the resources raised will be specifically targeted towards local entities that have been affected by the impact of Covid-19,” Mr Yamba said in a statement.

He explained that the yields being applied on the bond were market as they had no co-relation with the Eurobonds.

“From the investor point of view, the interest rates should be attractive as it provides a higher return on the investments given the longer-term maturity that pays a higher yield compared to a bond with a relatively shorter- term of maturity,” Mr Yamba said.

Out of K1.8 billion worth of applications received so far from the banking sector, K533 million has been approved by the Bank of Zambia.

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