19 December 2012

Zimbabwe: CBZ Opens U.S.$25 Million AMA Bills

CBZ Bank Limited is back on the market with Agricultural Marketing Authority Bills to raise about US$25 million to support the production of soya- beans during the current summer cropping season.

A senior bank official, speaking on condition of anonymity, said the latest offer on a tap basis rides on the back of overwhelming success of the last float.

"The papers (AMA Bills) are performing very well that is why the bank is coming back to the market. The last AMA Bills were in two sets -- the US$4,5 million AMA Bills guaranteed by CBZ and US$17,6 million AMA Bills guaranteed by Government. These have been fully paid," said the official.

The AMA Bills from the last float were paid in full for the first batch that matured on August 17 2012, and the second tranche that matured on October 10.

Efforts to get a comment from CBZ Holdings group chief executive Dr John Mangudya were in vain.

Features of the latest bill include tap issue (continuous float), 10,5 percent interest, 279-day tenor, payment is on allotment and opened last Thursday.

Special features include prescribed asset status, liquid asset status and exception from tax and are guaranteed by the Government.

CBZ Bank said applications must be for a minimum of US$50 000 in multiples of US$10 000.

Following the overwhelming success of the last set of AMA Bills there has been a request from the same investors for a similar issue of AMA Bills.

In light of the need to fund specific agricultural programmes, AMA is believed to have since directed CBZ to offer the bills on a tap issue, targeting the same investors who are keen to take up the bills again.

Said a Harare-based financial analyst: "AMA should be commended for bringing confidence to the capital market by ensuring that funds are set aside to meet the obligations to (AMA Bills) investors."

The confidence brought to capital markets could see more players participating in tenders and willing to invest in long tenure instruments.

Further, while markets were sceptical to about parastatals such as AMA, it appears innovative funding mechanisms that are specific could bring a new dimension to funding agriculture in Zimbabwe.

CBZ has been at the forefront of mobilising financial support for the sector because of its philosophy that agriculture in the backbone of this economy.

"Our philosophy is to support good farming programmes with a bias towards going forward on helping smallholder farmers," the official said.

This is consistent with the position taken by the Reserve Bank to extend more resources to small farmers next year. Dr Gono said big and established farmers would have to find their own means to secure funding for their operations.

But the RBZ would prescribe the proportion of bank loans that should go to small-scale farmers.

Apart from the AMA Bills, CBZ Bank has extended a total of US$35 million to agriculture, directly to farmers and to farming input suppliers.

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