According to the Zambian Media in May 2014, International Finance Corporation (IFC), a member of the World Bank Group invested in bonds issued by Bayport Financial Services Limited, Zambia’s largest microfinance lender, to help the company raise funds in the domestic markets and expand services for formally employed low - and middle-income Zambians. IFC invested a sum of 60 million kwacha ($9.3 million) in Bayport's first issuance under its newly registered Medium Term Note Program. To grace this momentous occasion, IFC country head for Zambia and Malawi, Sylvain Kakou said. “IFC is sending a strong signal of confidence as an anchor investor in Bayport’s first bond issuance. By encouraging Zambian companies to issue in the local markets, IFC can link domestic savings to private sector investment while supporting the country’s nascent corporate bond market.” IFC supports the development of domestic capital markets by issuing local currency bonds and by helping domestic private sector companies to access local bond markets. IFC also provides local currency financing to support private sector development through loans and structured products. Assuming you are the Portfolio Director at IFC Zambia in charge of determining bonds performance. You are informed Bayport bond investment of 60 million kwacha ($9.3 million) was placed on a 5 years bond with a face value of K1000 and coupon rate of 3%. The Zambia economic forecast projected yields are as follows: 1st Year – 3.4 % 2nd Year – 3.9% 3rd Year - 4.2% 4th Year - 4.5 % 5th Year – 5% Required: A. Update the IFC bond investment by conducting a bond valuation for the K60 million bonds invested in Bayport. B. Advice IFC Zambia management when they can sell the bond in the secondary market upon recovering the initial investment of K60 million. C. Determine the annual earnings on the bond investment.
According to the Zambian Media in May 2014, International Finance Corporation (IFC), a member of the World Bank Group invested in bonds issued by Bayport Financial Services Limited, Zambia’s largest microfinance lender, to help the company raise funds in the domestic markets and expand services for formally employed low - and middle-income Zambians. IFC invested a sum of 60 million kwacha ($9.3 million) in Bayport's first issuance under its newly registered Medium Term Note Program. To grace this momentous occasion, IFC country head for Zambia and Malawi, Sylvain Kakou said. “IFC is sending a strong signal of confidence as an anchor investor in Bayport’s first bond issuance. By encouraging Zambian companies to issue in the local markets, IFC can link domestic savings to private sector investment while supporting the country’s nascent corporate bond market.” IFC supports the development of domestic capital markets by issuing local currency bonds and by helping domestic private sector companies to access local bond markets. IFC also provides local currency financing to support private sector development through loans and structured products. Assuming you are the Portfolio Director at IFC Zambia in charge of determining bonds performance. You are informed Bayport bond investment of 60 million kwacha ($9.3
million) was placed on a 5 years bond with a face value of K1000 and coupon rate of 3%. The Zambia economic
1st Year – 3.4 %
2nd Year – 3.9%
3rd Year - 4.2%
4th Year - 4.5 %
5th Year – 5%
Required:
A. Update the IFC bond investment by conducting a
bonds invested in Bayport.
B. Advice IFC Zambia management when they can sell the bond in the secondary
market upon recovering the initial investment of K60 million.
C. Determine the annual earnings on the bond investment.
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