THE Bank of Zambia (BoZ) is inviting applications for the issue of a COVID-19 bond worth K2.67 billion, whose proceeds are earmarked to be utilized in mitigating the negative impact of the pandemic on economic activities.
In a notice issued by the central bank, Tuesday, the general public are invited to submit applications for the issue of the COVID-19 bond being issued under a five, seven, 10 and 15-year maturity tenure.
According to the notice, the minimum value of each offer will be K500,000 at cost for both domestic and foreign investors, and that the pricing of the bonds will be market-based and will be benchmarked against the bond auction dated, June 26, 2020, among other terms and conditions.
“The bonds will be sold on a first-come, first-serve basis from the time of publication of this notice until Friday, July 31, 2020, or upon realisation of the amount on offer. The offers will settle on Delivery Versus Payment (DvP) basis at T+2 in the Central Securities Depository (CSD) system. All offers must be in multiples of K50,000. The Bonds will be traded like any other bond in the market and will be subject to general bond issuance conditions,” read part of the notice.
The amount of bonds available on offer is a total of K2,671,000,000.00.
This latest COVID-19 bond represents the third major initiative the central bank is implementing after launching an unprecedented K10 billion Medium-Term Refinancing Facility, while assisting government raise funds amounting to an K8 billion COVID-19 bond designed to inject much-needed liquidity into the local economy, which is currently stressed from the effects of the Coronavirus pandemic.
A bond is short-term debt instrument governments, among other entities, use to raise funds to pay for a specific function.
In most cases, a bond is redeemable at face value on a particular date, and has a fixed rate of interest that is paid at regular intervals through to maturity.