Hogan Lovells Advises Arrangers of the First Zimbabwean Bond Issue of the Post-Zimbabwe Dollar Era

Tuesday, July 5, 2011
Tags:  Hogan Lovells
Hogan Lovells has advised The African Export-Import Bank (Afreximbank) and Dinosaur Securities (UK) Ltd as co-arrangers of an issue of US$50 million guaranteed 8.5% bonds, due 2014, by CBZ Bank Limited (CBZB), Zimbabwe’s largest bank. The bonds were listed and admitted to trading on the Cayman Islands Stock Exchange on 20 June 2011.

The issue of the bonds is the first by a Zimbabwean issuer since the formation of the coalition Government of National Unity (GNU) in 2008, following the notorious period of hyperinflation of the Zimbabwe dollar.  The GNU suspended the use of the Zimbabwe Dollar in 2009, replacing it with a multicurrency system under which the US dollar, Euro, Sterling, Rand and Pula are now the official currencies of Zimbabwe.
The bonds are guaranteed by Afreximbank, a supranational financial institution established by a number of African states to facilitate, promote and expand intra- and extra-African trade. 
CBZB is wholly owned by CBZ Holdings Limited (CBZH), whose shares are listed on the Zimbabwe Stock Exchange. CBZH’s largest shareholder, with approximately 16.1%, is the Zimbabwe Government, which has encouraged the issue of the bonds as part of the GNU’s goal of encouraging external investment in Zimbabwe.
Afreximbank is a long-standing client of Hogan Lovells, which, in 2009, acted on the establishment of Afreximbank’s Euro Medium Term Note programme and debut bond issue thereunder. Last year, Hogan Lovells advised Afreximbank on the establishment of a local currency bond issuance programme listed on the Botswana Stock exchange.  
Dinosaur Securities (UK) Limited is part of a New York based investment banking group with a focus on emerging markets.  This transaction marks Hogan Lovells’ first bond issue working with Dinosaur Securities.
The Hogan Lovells team advising Afreximbank and Dinosaur Securities was led by international debt capital markets partner Andrew Carey, assisted by London senior associate Jonathan Malim and associate Meta Hanlon.
Andrew Carey said: 
“The bond issue, although relatively small, is a potentially important step in Zimbabwe’s recovery from its period of devastating hyperinflation.  It is well known that the country has huge potential based on its wealth of natural and human resources.  Hogan Lovells is committed to the African market and is proud to have been involved in this development for Zimbabwe.  Structuring a bond for an issuer from Zimbabwe was inevitably complicated by the need to ensure that all involved were comfortable that international sanctions laws were strictly adhered to.  Hogan Lovells was able to draw on its regulatory expertise in this area both in Europe and the United States.”  
London banking partner, and Afreximbank relationship partner, Andrew Gamble added:
“We have a long standing relationship with Afreximbank and are pleased to have worked together again on the first bond issue on which Afreximbank had acted as guarantor. We developed with Afreximbank a form of financial guarantee and counter-indemnity which can act as a model for future transactions.  This was also our first transaction with Dinosaur Securities, with whom we very much enjoyed working.”