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Chengetedzai engaging potential issuers over ZSE’s debt securities market

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Chengetedzai engaging potential issuers over ZSE’s debt securities market

HARARE – Chengetedzai Depository Company says it has started engaging potential issuers regarding on-boarding of eligible over-the-Counter (OTC) securities for the Zimbabwe Stock Exchange (ZSE) Debt securities market.

However, the ZSE Debt Market Rules which will govern the market are yet to be gazetted by the authorities and Chengetedzai says the timeline for the achievement of this objective remains unclear.

“CDC and the ZSE continue to actively engage each other on the listed debt securities market by holding bilateral meetings weekly,” chief executive officer Campbell Musiwa said in a CSD monthly update for October 2016.

The Zimbabwe Stock Exchange has since set a minimum amount of $1 million for institutions who want to raise capital through the issuance of debt securities. According to the Debt Listing Rules applicants for listing debt securities must have the intention of raising at least $1 million, in full, through issuance of securities of at least one-year tenure.

The requirements also allow for the issuance of specialized products such as asset-backed Debt Securities and High Yield Debt Securities while guidelines are provided for the issuance of securities by the public sector. The potential issuers of the bonds would be government and all quasi-government institutions such as the utilities like ZESA, ZINWA.

On the ZSE, October recorded improved trading volumes with turnover increasing 78% to $23.20 million while the market value of securities placed on the CSD increased 15% to $1.47 billion.

The number of securities accounts on the CSD increased steadily with 98 new accounts being opened during the month bringing the total number of accounts to 7,183.

Local investors account for 86% of accounts opened with foreigners accounting for the remaining 14%. Individual investors accounted for 55% of the 98 new CSD accounts that were opened in the month.

According to Musiwa, the average dematerialization penetration ratio (Demat ratio) across all counters remained at 32% as at 31 October 2016.

During the month, 606 new securities deposit transactions were processed and this increased the cumulative number of deposit transactions processed since going live by 1.5% to 41,629 from 41,023 as at 30 September 2016.

In terms of clearing and settlement of trades, the ZSE recorded a turnover figure of $23.20 million, the highest monthly figure achieved since January 2016, a 78% increase from the previous month figure of $13.05 million. Analysts have attributed the increased trading activity to efforts by local investors to hedge the uncertainty around the introduction of bond notes.

771 ZSE trades were processed by CSD System in the month of October 2016 bringing the total number of trades processed since going live to 14,907.

The value of the securities placed on the CSD also increased 19% from $1.24 billion as the end of August 2016 to US$1.47 billion in October 2016.

Looking ahead Musiiwa said Chengetedzai shall continue to focus on training market participants on the CSD’s Fixed Income Module and discussions with issuers for the onboarding of OTC fixed income securities.

He said the migration from settlement using commercial bank funds to the Reserve Bank of Zimbabwe is also expected to occur in the short term after technical go-live status was achieved in October 2016.

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