BY STAFF REPORTER
African Guaranteed Fund (AGF), the foreign backers of Untu Capital’s bond issue, have withdrawn their support to the microfinance company citing Zimbabwe’s current unpredictable economic environment, which has seen Untu failing to remit guarantee fees out of the country.
Untu Capital raised $5 million last year after it issued several series of tradable bonds which were oversubscribed.
In the first tranche, Untu raised $1 million, then $2 million apiece from the second and third tranches. The bonds have a maturity date of June 10, 2021.
In a notice to noteholders, the company said it had failed to secure foreign currency allocations to remit the guarantee fees.
“Noteholders of Untu Capitals’ Notes Tranche 2 ISIN number ZWFSE0000202, and Tranche 3 ISINZWFSE0000203 that were issued in terms of its programme memorandum dated December 1, 2017, issued and listed on the Financial Securities Exchange (Finsec) are hereby notified of the suspension of the African Guarantee Fund (AGF) guarantee,” the Untu notice read.
“Please, be advised that the company is currently working with the trustee of the noteholders and plans to increase the security offered. Noteholders will be advised as soon as this is finalised.”
Untu said it would continue to engage the Reserve Bank of Zimbabwe, through its bankers, for an allocation of foreign currency for the amounts due to AGF.
AGF provides support to financial institutions which finance Africa’s small and medium-sized enterprises through the provision of partial financial guarantees and capacity development assistance.
It was founded by the government of Denmark through the Danish International Development Agency, the government of Spain, through the Spanish Agency for International Co-operation and Development and the African Development Bank.
Agence Française de Développement joined AGF in 2015, followed by the Nordic Development Fund in 2016.
The Investment Fund for Developing Countries and KfW Development Bank joined AGF in 2018.
AGF’s exit from the deal reflects the falling levels of confidence in Zimbabwe as economic fundamentals continue to deteriorate.