The bond offers worth K70 billion by Investrust Bank will help government assess the depth of the Zambian financial market in the period after the global credit crunch. Up to this point, it has not been clear the extent to which the credit crunch affected the Zambian financial market away from the immediate impact on the exchange rate.

The coming on the market by a private bank shortly after the credit crunch should be welcomed as that remains the best way to assess levels of investor confidence, the real interest rates as well as the liquidity situation in the economy.

In addition, government will also measure the market expectation on yield rates offered by the Bank of Zambia on treasury bills as well as government bonds. If Investrust Bank manages to realize the issued amount during the stipulated issue period, the government and all other market players should begin to know the economy is after all stable and investors anticipating better prospects in the future.

The bank has invited various players to participate in a bond with the maximum period of maturity being six years and this in itself shows how the private sector perceives the Zambian economy in the medium to long term. The focus will be on the level of response by banks, pension funds, insurance companies, unit trusts, collective investment schemes, institutional investors and individuals given that most of the players are still apprehensive about the instability in the market caused by the global credit crunch.

It is important that Zambians comprehensively study this opportunity and make informed decisions about the level of participation in the bond. The bond will certainly have implications such as the possible competition against the government securities as the Ministry of Finance and National Planning is also participating in the market to finance the government deficit.

In addition, the other players seeking to raise private capital may have to assess their timing so as not to crowd out the market. In the event the market is crowded out by various offers, it will be healthy for the economy as we expect interest rates to drop significantly.