Government, municipal, corporate and mezzanine debt — yield curve, sovereign risk, currency policy, regional comparisons, and the path back to long money
By Jabulani Simplisio Chibaya
HARARE – A BOND is a promise about time. Capital changes hands today on the strength of a claim that it returns, with something extra, on a fixed future date. That claim is only as good as the institution making it, and the currency it’s denominated in. Zimbabwe’s bond market — government, municipal, corporate and the informal mezzanine layer beneath all three — is a market in promises about time, in a country where time has repeatedly betrayed savers. Understanding it means understanding why so much domestic capital still refuses to go long.
The Architecture: Government, Municipal, Corporate, Mezzanine
Government paper dominates. The Reserve Bank of Zimbabwe (RBZ) issues Treasury Bills on Treasury’s behalf, mostly 91-day paper, alongside occasional longer bills and 2- to 7-year Treasury Bonds under the annual Borrowing Plan. In mid-2026 the RBZ layered in ZiG-Denominated Term Deposit Facility Bills at 30, 60 and 90 days, paying 8%, 9% and 11% — a liquidity-mopping tool as much as an investment one. Much outstanding TB stock was never sold for cash; it settles government arrears to suppliers, which securitises unpaid invoices while quietly expanding domestic debt.
Municipal bonds barely function as an instrument. Local authorities can legally borrow, but governance strain and revenue collapse have kept them out of the market. Harare’s mayor said as much in April 2026, telling a business dialogue the city could no longer run on “hand-to-mouth” financing and needed to move toward infrastructure and municipal bonds. That a capital city still frames municipal bonds as aspiration, not track record, tells you where this segment sits.
Corporate bonds are reviving rather than declining — which is itself revealing, since the market once existed and died. Issuance was meaningful on the old exchange until the 1990s, went dormant after 2001, and companies leaned on equity and bank debt instead. The Infrastructure Development Bank of Zimbabwe (IDBZ) kept a pulse alive: a $30 million bond in 2012 at 10%, a $65 million issue in 2014 backing power projects at 9%, and a ZWL$2 billion “Vaka/Yakha” infrastructure bond programme in 2020. The bigger recent signal is CBZ Holdings’ July 2026 mandate to arrange a US$600 million infrastructure bond for the Zimbabwe National Road Administration (ZINARA), targeting corridors that carry roughly 80% of the country’s freight.
Mezzanine finance — the hybrid layer between senior debt and equity — barely has a formal home yet. SMEs make up 76.1% of businesses, generate an estimated $14.2 billion in annual revenue and employ over 70% of the workforce, per the 2025 Economic Census, yet remain largely locked out by bank collateral requirements. The government’s answer, launched mid-2026, is the Zimbabwe Entrepreneurship Exchange (ZEEX): a regulated private-markets platform meant to let SMEs raise structured debt or equity before graduating to the ZSE or VFEX. Whether mezzanine capital actually shows up to price that risk remains the open question.
The Curve That Isn’t, and What Rates Reward
A healthy yield curve slopes upward, smoothly, across maturities. Zimbabwe doesn’t really have one — just short paper clustered near the policy rate, with almost nothing liquid beyond seven years. The Bank Policy Rate anchors everything: held at 35% through 2025 to defend the ZiG, then cut to 30% in June 2026, the first reduction since ZiG’s April 2024 launch. The Targeted Finance Facility rate fell from 20% to 15%, with bank on-lending capped at 25%. Rates are deliberately punitive — designed to discourage speculative borrowing, not to build a tradeable term structure. Compare South Africa’s genuine curve: three-month paper near 6.5%, five-year near 8%, ten-year near 8.5%, thirty-year near 9.5% — real duration pricing, not just a policy lever.
Sovereign Risk and the Policy Machinery
Zimbabwe carries no current rating from S&P, Moody’s or Fitch; the majors have stayed away given unresolved arrears, leaving a domestic outfit, ICRA Ratings Zimbabwe, to cover corporate and bank issuers. That absence is itself telling — sovereign risk is priced by memory and news flow, not a formal grade offshore mandates can reference. Monetary policy has done the heavy lifting: inflation fell from near 95.8% in July 2025 to single digits by January 2026, and the RBZ has floated a gold-and-forex-backed “structured currency” as a bridge to eventual mono-currency status, even as the multicurrency regime itself was extended to 2030. Fiscal policy has been comparatively disciplined — no direct government borrowing from the central bank since April 2024 — though a statutory ceiling still permits borrowing up to 20% of prior-year revenue, and authorities plan to tighten it further.
Who Actually Buys Long Money
Zimbabwe has a built-in bid that should have solved long money years ago: prescribed-asset rules force pension funds to hold at least 20% of portfolios, insurers 10–15%, in government and other prescribed securities. Compliance is chronically poor — pension funds sat near 10.4% against that 20% requirement as of mid-2025, life assurers under 9% against 15%. The reason is simple: fixed-coupon local-currency paper has repeatedly been destroyed by inflation and currency conversion, so trustees quietly prefer equities and property that can reprice. Foreign appetite tells a more encouraging, if fragile, story. FDI inflows hit a record US$965 million in 2025, up 61.7% on 2024, and reserves backing the ZiG rose from roughly US$276 million in April 2024 toward the US$1 billion-plus range by early 2026, improving import cover. But that capital is lumpy and deal-driven, concentrated in mining and gold, not yet the diversified institutional demand that deepens a bond market’s belly.
The Cash Economy Beneath the Curve
None of this reads correctly without the informal sector. Estimates put informal activity at 58–60% of GDP and up to 75% of employment — most of the productive economy sitting outside the banking and savings system that bond issuance depends on. A domestic market needs savers channelling surplus cash through banks, pensions and insurers into long paper. When most transacting happens in physical cash outside that loop, the pool of addressable long-term savings is structurally smaller than headline GDP suggests, and no amount of prescribed-asset regulation reaches money that never enters an account.
Zimbabwe in the Region: Zambia, Ethiopia, South Africa
Regional peers show three chapters of the same debt-resolution story. Zambia defaulted on its Eurobonds in November 2020, restructured under the G20 Common Framework, completed its bond exchange in 2024, and by mid-2026 was confident enough to launch a buyback of its 2053 Eurobond, earning a Fitch upgrade to ‘B-‘ with stable outlook. Ethiopia defaulted on its sole US$1 billion Eurobond in December 2023 and spent over two years in stalled, collapsed and reopened talks before bondholders and the China/France-co-chaired Official Creditor Committee converged, by August 2026, on a restructuring cutting principal roughly 12–15% and re-coupling near 6.15%. South Africa was never in this conversation: it runs one of Africa’s deepest domestic bond markets, a full nominal curve, inflation-linked bonds, and a repo rate (7% in mid-2026) that transmits through a genuinely functioning term structure. Zimbabwe sits apart — no outstanding Eurobond to restructure, so no Zambia- or Ethiopia-style route back to market access. Its re-engagement instead runs through the African Development Bank-facilitated Structured Dialogue Platform and an IMF Staff-Monitored Programme, whose first review Zimbabwe passed in July 2026.
Debt, Domestic and External
Total public and publicly guaranteed debt stood near US$21.5 billion at end-2025 (about 47% of GDP) — external debt of roughly US$11–13 billion, domestic debt near US$8.3 billion; more recent AfDB figures put the total closer to US$23.4 billion. Of the external stock, about US$7.7 billion is owed to multilateral and bilateral creditors currently in arrears. The Arrears Clearance, Debt Relief and Restructuring Strategy — the latest in a line stretching back to the 2001–2008 Domestic Debt Restructuring and 2010 Sustainable and Holistic Debt Strategy — proposes clearing remaining arrears over 2026–2030 through a revenue-linked framework, converting arrears into non-tradable bullet-repayment securities.
Infrastructure and Ring-Fencing Value
The CBZ-ZINARA US$600 million road bond is the clearest current template: a revenue-backed structure tied to toll and freight receivables on named corridors, blending DFI partnerships, blended finance and domestic pension and insurance capital rather than one funding source. IDBZ has used special purpose vehicles and PPPs for the same reason — isolating a project’s cash flows from sovereign credit risk is often the only way to make Zimbabwean infrastructure paper investable. The lesson generalises: ring-fenced, dollar-denominated, revenue-backed bonds tied to visible cash flows travel further with investors than general-obligation government paper.
Managing Bonds Through Currency Volatility
A Zimbabwean bond investor stacks two risks: credit risk and currency risk. The ZiG’s 43% devaluation in September 2024, followed by eighteen months of tight policy to rebuild credibility, is why rates have stayed so high — the RBZ has used the policy rate almost entirely as a currency-defence tool rather than a growth lever. That has pushed practical bond management toward US-dollar instruments, shorter tenors, and floating or inflation-linked structures wherever allowed, with local-currency long bonds a hard sell until the structured-currency transition proves durable.
Legacy Debts: The TBs That Won’t Die
Domestic debt carries scar tissue from earlier crises. The 2015 RBZ Debt Assumption Act transferred an estimated US$690.5 million to US$1.35 billion of pre-2008 central bank liabilities onto government books, settled through long-term bonds to original creditors. A second wave came in December 2021, when Parliament approved transferring roughly US$2.5 billion in “blocked funds” — foreign-currency balances trapped by the 2019 currency conversion — from the RBZ and private sector to central government. Both episodes converted a monetary failure into tradeable government paper, which is precisely why domestic bondholders remain wary of new local-currency issuance regardless of the coupon on offer.
How Outside Investors See It
Perception has improved but stayed cautious. Zimbabwe still carries sanctions on senior individuals, a poor record on ICSID arbitration awards in land-dispute cases, and credit growth under 1% in early 2026 despite macro stability — signs confidence hasn’t yet translated into cheap, abundant private credit. The FDI record and reserve build-up are genuine positives, but they sit alongside a structural memory: foreign holders of Zimbabwean paper have been burned by currency conversions before, and rebuilding that trust is a multi-year project, not a single monetary policy statement.
Reviving the Market
The clearest institutional effort is the Bond Market Association of Zimbabwe (BMAZ), which signed an MoU with Botswana’s Bond Market Association in 2024 to share research and best practice — an acknowledgment that Botswana’s market, built over a similar timeframe, has tripled in capitalisation while Zimbabwe’s stayed underdeveloped. The Zimbabwe Stock Exchange has separately submitted revised bond-listing guidelines and a pricing framework to the securities regulator, aiming to bring an estimated US$1.2 billion of existing bonds and TBs onto a tradeable secondary platform. ZEEX adds a parallel on-ramp for smaller issuers.
What Would Actually Move the Needle
A few gaps stand out. Secondary-market liquidity first: most Zimbabwean bonds are bought and held to maturity because there’s nowhere real to sell them, which kills price discovery and the yield curve with it. Second, prescribed-asset reform that indexes returns to inflation or currency movement, rather than assuming pension funds will keep buying paper that erodes in real terms. Third, deliberate engagement with an international rating agency — even a speculative-grade rating gives offshore mandates a reference point they currently lack. Fourth, more ring-fenced, revenue-backed instruments on the ZINARA model for energy, water and toll infrastructure, rather than general government paper. Fifth, diaspora bonds deserve serious study: remittances already run into the billions annually, exactly the kind of patient, loyalty-driven capital that has funded infrastructure elsewhere on the continent.
None of this fixes the constraint quickly. A bond market is ultimately a wager on the future value of a promise, and Zimbabwe’s savers have good, recent reasons to discount that promise heavily. Rebuilding a real term structure — one stretching past seven years — is less a market-design problem than a credibility-building one, and credibility compounds far more slowly than interest.
References
Reserve Bank of Zimbabwe, ZiG Denominated Term Deposit Facility Bills and 2026 Monetary Policy Statement — rbz.co.zw
Zimbabwe Ministry of Finance, Public Debt Report and Borrowing Plan/Issuance Calendar — zimtreasury.co.zw
“RBZ cuts interest rate as inflation eases, ZiG maintains stability,” Herald, June 2026 — heraldonline.co.zw
“RBZ Holds Policy Rate At 35% To Protect Inflation Gains,” February 2026 — africa-press.net
“Harare eyes bonds, reforms to end ‘hand-to-mouth’ financing — Mayor,” Newsday, April 2026 — newsday.co.zw
“CBZ Holdings Showcases Zimbabwe’s Infrastructure Investment Opportunity and USD600 Million Infrastructure Bond,” AFNIS Insights, July 2026 — afnisinsights.com
Infrastructure Development Bank of Zimbabwe, Bond Issuances and Priority Sectors — idbz.co.zw
“Zimbabwe Stock Exchange Moves to Revive Bond Market” — african-markets.com
“Botswana and Zimbabwe Bond Market Associations Ink MoU,” Business Weekly & Review, 2024 — businessweekly.co.bw
“Zimbabwe Launches SME Exchange to Boost Business Financing,” Dabafinance/allAfrica, 2026
“Insurance, pension sectors miss prescribed asset targets,” Zimbabwe Independent, October 2025 — theindependent.co.zw
African Development Bank, Zimbabwe Economic Outlook and ZACDEP grant announcement — afdb.org
Coface, Zimbabwe Country Risk File — coface.com
Zimbabwe Public Debt Report and Structured Dialogue Platform progress report — zimtreasury.co.zw
“Zambia bond prices soar on debt deal progress, IMF support,” Zambia Monitor, May 2026
“Zambia Begins Buying Back Eurobonds,” Zambian Observer / Mwebantu, May–June 2026
“Ethiopia Debt Restructuring Clears Major Hurdle,” The Voice of Africa / The Reporter Ethiopia, August 2026
“Ethiopia and Bondholders Reach New Preliminary Deal,” Ecofin Agency, June 2026
Trading Economics, South Africa Government Bond Yield and 30-/5-Year Note Yield data
IMF, “Zimbabwe: IMF Approves Completion of First Review under Staff-Monitored Program,” July 2026 — imf.org
Reserve Bank of Zimbabwe (Debt Assumption) Act, 2015 — veritaszim.net; World Bank
Zimbabwe Debt Management Performance Assessment
World Economics, Zimbabwe Informal Economy data — worldeconomics.com
Global Legal Market, “Zimbabwe: The Investment Case,” July 2026 — globallegalmarket.substack.com
globalEDGE (Michigan State University), Zimbabwe Risk Assessment
Jabulani Simplisio Chibaya is a Data and AI Consultant specializing in data science, artificial intelligence, blockchain, and cryptocurrency innovation. A seasoned conference speaker, he also writes on the intersection of technology, regulation, and economic development. Contact: Cell: +263 778 921 881 | Email: simplisiochibaya22@gmail.com | LinkedIn: https://www.linkedin.com/in/jabulani-simplisio-chibaya
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