CBZ $200m bond on course

Published: 05 May 2014

CBZ Holdings has said plans to raise $200 million through a Diaspora Bond are at an advanced stage after the group successfully paid out the maturity on the first bond of $68 million.

Incoming chief executive Mr Never Nyemudzo told the annual general meeting yesterday that the group had retired the maturity on its maiden Diaspora Bond two weeks ago and plans to float the $200 million bond were at an advanced stage.

The bond will be guaranteed by Afreximbank. It is anticipated to have a coupon rate of around 7 percent based upon the successes of the first bond which had an 8,5 percent coupon rate.

Mr Nyemudzo said the group will continue to raise long-term deposits which would enable the group to fund its long-term projects, which also include housing developments.

The group has started the first phase of the 1 095 stands in Gweru Nehosho high density suburbs. The phase is expected to cost $8 million and should be completed in eight months. The second phase which involves construction of co-houses will begin soon after.

Mr Nyemudzo said the group would continue to unlock value in the land bank with particular focus on housing.

In terms of capitalisation, Mr Nyemudzo noted that they were still above the regulatory requirements with the total at $211 million and core capital at $171,8 million at the end of the quarter. CBZ Bank's core capital was at $161,8 million against the Reserve Bank of Zimbabwe's minimum requirement of $25 million.

CBZ Holdings' bottom line in the first quarter fell 43,7 percent to $5,8 million but the group is confident it will meet the full year forecast growth of 5 percent.

Mr Nyemudzo said the first quarter continued to experience liquidity challenges, which had in turn increased the cost of doing business as the cost of funds went up.

"As a result there was pressure on our customers to meet their obligations on time."

Mr Nyemudzo said in response; the group had strengthened its customer relationships and enhanced collection efforts on overdue debt.

The impairment charge in the quarter had grown to $3,8 million from $2,5 million in the comparable year ago period.

"We continue with our efforts to enhance the quality of our earnings."

Overall, Mr Nyemudzo said activity was low with total income down 7,6 percent to $34,4 million. Underwriting income was flat at $1,7 million.

Total expenditure grew to $23,3 million from $21,2 million last year.

Total assets grew 30,7 percent to $1,66 billion with deposits at $1,42 billion from $1,33 billion in December and total advances at $1,07 billion, a 15,6 percent increase from last year.
- The Herald