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IFC success and PLS policy change cheer SEC
Dr Wala Chabala, secretary and chief executive Securities and Exchange Commission (SEC) announced that the K2.5 billion medium term notes that SEC had authorized the for the IFC whose first tranche of K150 million bonds has since been issued had out performed expectation.|
Dubbed the Zambezi Bond, the tranche was oversubscribed by 4.8 times and erases any doubts of Zambians’ appetite in the capital markets for IFC securities.
Dr Chabala says however some concerns have been raised, as the proceeds of the bond have not been invested in businesses, as is the expectation of the IFC.
Normally, local small and medium enterprises were expected to be the recipients of the funds as a way of stimulating the private sector, however, the concerns are that the proceeds of this issuance have gone into another security as opposed to going into productive business activities.
‘We trust now that since IFC has got lessons to regarding the process of issuing securities in the Zambian market, that the next issuance will be matched to the pipeline of intended investments, particularly in the small and medium enterprises.’
Dr Chabala said the Property Loan Stock structure which was announced by the minister of Finance in the 2014 budget allows investors in property for entities listed on the Stock Exchange to be treated as lenders, therefore allowing them to receive interest on their ‘loan’ instead of waiting for dividends as per the dividend policy of the company.
The expected outcomes of this policy change are many among them are; the stimulation of the Lusaka Stock Exchange as property companies come to list to take advantage of the Property Loan Stock structure. Investors will be able to invest in a diversified portfolio of properties, thereby reducing current risk. Additionally, there will be no exclusivity in the types of investors entering the property market, as all are welcome whether as individual or as small and large entities. This should also contribute to liquidity of investments in property with the buying and selling of holdings on the market occurring anytime.
Reviewing SEC performance in the last quarter ending September 30, 2013 the Commission saw an increase in the number of registrations received and approved from a lot of entities, and an increase in debt registered this year than any other year.
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