Fixed Income Market
Debt instruments are paper or electronic obligations that enable the issuing party to raise funds by promising to repay a lender in accordance with terms of a contract. Types of debt instruments available locally include notes, bonds, and debentures. Semi fixed income instruments like preference shares are also available.
Fixed Income Instruments have their prices influenced by two main factors, the number of days before the next coupon (interest) payment and the expected yield or interest rates. When the expected or market interest rates are higher than the bond’s coupon rate then the bond itself will trade at a discount. When the expected yield is lower than the bond coupon then bond will trade at a premium. Bond holders will be holding an asset that is earning more than the prevailing markets rates and investors must pay a premium to hold such an asset.
The FINSEC Fixed Income Board is available for the listing of bonds and alternatives without limitation. Admissable instruments range from Debentures, Medium Term Notes through to Corporate bonds
Debentures are the promissory notes issued to the debenture holders, often called creditors of the firm, for a fixed period of time and at a fixed rate of interest. It is considered a short term
Debentures can fall under the short-term instruments. Debentures are debt securities used to raise capital from the public and are backed by the integrity and the credit worthiness of the issuer. Debentures offer more flexibility for issuers than a term loan as there is more variety with respect to the maturity, security, interest rate and repayment.
This type of debt instrument is used by a company so it can have constant cash flows coming in from its debt issuance; it allows a company to tailor its debt issuance to meet its financing needs. Medium-term notes allow a company to register with the Securities and Exchange Commission Of Zimbabwe (SECZ) only once, instead of every time for differing maturities.
Municipal bonds are debt securities issued by local authorities such as Municipalities or Town Councils to fund day-to-day obligations and to finance capital projects such as building schools, clinics, roads, water and sewer systems.
Private Corporations and public institutions are eligible to bring fixed income securities on FINSEC.
The minimum capitalisation of the listing shall be US$ 1 million or any lower figure as the FINSEC Listings Committee may recommend.
An Issuer that wishes to list its securities on the FINSEC Fixed Income Board will be required to appoint a Financial Advisor licensed by SECZ who will draw the Issuer Admission Application Form and assist the Applicant in preparing the submissions inclusive of the Offer Document, financial statements and the pricing settlements.